“I’ve been eating at KFC the last few days, could that be a problem?” (“前几天刚吃了肯德基会有问题吗”) asked one Weibo user.
The coming week could be a nightmare for KFC in China. Depending on developments in an outbreak of a new strain of avian flu called H7N9, KFC could see its business decimated by another chicken scare just months after a previous one.
KFC is not the only brand worried. Tyson chicken is already rolling out damage control.[more]
In Shanghai and surrounding cities like Nanjing and Hangzhou, an area home to nearly 70 million, authorities have instituted massive culls at live markets, killing tens of thousands of chickens. With a trickle of new cases every day, about a third resulting in death, tensions are high. The WHO reported that the disease does not appear to be transferable from human to human and China reported the possibility of a vaccine in the near future.
While authorities have said that eating cooked chicken and eggs is fine, it has warned against undercooked eggs and any contact with live chickens, but consumers, already wary of government information especially after cover-ups during the 2002 SARS scare, are choosing safe over sorry. Some local restaurants have stopped serving dishes with chicken as well.
“We remain vigilant and alert and continue to maintain our strict and stringent commitment to food safety and cleanliness for the health and safety of our customers and employees. This means a 100 percent compliance with a daily sanitization, hygiene and safety checklist across all our operations,” Jessica Lee, Senior Director, Corporate Relations for McDonald’s Asia Pacific, told brandchannel.
McDonald’s finds itself in the unfortunately timed position of a chicken nugget promotion. Launched March 13, McDonald’s rolled out a second delivery-targeted portion of the campaign on announcing a price cut on 20 McNuggets from 36 RMB to 20 RMB. That announcement and accompanying ads came on April 3, the same time H7N9 was hitting the news. To many, it appeared that McDonald’s was quickly discounting its chicken in the face of the chicken cull.
There is reason to believe McDonald’s might be spared the worst. While KFC was pleased just to see its sales flat, McDonald’s—which had been named alongside KFC in the 2012 chicken supply chain scandal—saw its same-store sales rise slightly. In China, McDonald’s is known more for its beef products. In fact, all of the viral buzz the Golden Arches recently got in China for its huge “German Style” beef and sausage burger was luckily timed to reinforce the brand’s image away from chicken.
Meanwhile, KFC’s image is all about chicken. With 4,000 locations in the country, China is now KFC’s most profitable market, making up a full 40 percent of the Colonel’s global revenue. The H7N9 bird flu scare is maybe the worst possible thing for KFC in China right now. The brand is not yet fully recovered from the 2012 tainted chicken supplier scandal that knocked a third off its China sales. It appeared to be making a recovery, with Yum! reporting the good news that KFC same store sales in February were flat, which was better than expected. Since March 28, the day H7N9 was reported to have stricken three in Shanghai, Yum! shares abruptly slid 7 percent after six weeks of steady gains, erasing any bounce the stock might have enjoyed from KFC’s new, youth-targeting boneless chicken products in the US. (China’s airline stocks have also taken a dive.)
So far, though a few restaurants have ceased chicken sales, most are forging ahead. The Zheshang Journal surveyed restaurants in Hangzhou and found business at KFC a little off but numerous other restaurants serving chicken as normal. In an email response to the Journal’s inquiry, the Hangzhou KFC headquarters reiterated the WHO’s statement that cooked chicken was safe.
Other publications have been less kind. News portal iFeng.com posted a picture of an empty Changchun city KFC, commenting that “usually there are lines here to order but not now. The few people there are avoiding ordering chicken products.” On Weibo, users posted pictures of empty KFCs, some at peak periods where counters are regularly clogged with lunch eaters. “Not even one person, is everyone scared of H7N9” (“无一人,大家都怕H7N9吗”) asked one user alongside his photo of an empty KFC.
Another brand with as much to lose as KFC is Tyson. On Monday afternoon, Tyson posted to its Weibo account: “#Fresh and safe from Tyson# In recent years, food safety issues abound. The safety and nutritiousness of meat products is a concern of everyone. A Tyson Foods survey shows that most consumers (88 percent), choose chicken for its quality and safety. #Tyson cold fresh chicken# All year providing high quality fresh chicken, winning the absolute trust of demanding consumers.”
China accounts for nearly 30 percent of Tyson’s international chicken sales, making it Tyson’s largest market outside of the US.
Perhaps KFC can turn the scare around with a little humor. Yum! could buy up rights to the 2005 hit song “I Don’t Want to Say I’m a Chicken” (“我不想说我是鸡”). Viewed millions of times, the song was released following China’s avian flu scare that began in 2004 and brought a little levity to the grim situation.