Yum! Brands earnings increase as China regains trust in KFC
After Yum! Brands suffers image problems due to avian influenza and chickens receiving unapproved levels of antibiotics, Chinese consumers are returning to KFC
Chinese consumers are regaining their confidence in KFC, as parent company Yum! Brands earnings grew 24 percent to $399 million during the first quarter of fiscal year 2014. The Yum! Brands first quarter ended March 22.
The positive financial results, released on April 22, are a step in the right direction for Yum! Brands, which struggled throughout 2013 as Chinese consumers had lost confidence in KFC. The quick service restaurant chain that specializes in chicken dishes saw a sharp reduction in Chinese customers after a state television station reported in December 2012 that some of KFC’s suppliers had given their chickens unapproved levels of antibiotics. The company was handed a second challenge when avian influenza outbreaks occurred in China in 2013 and caused worries about the safety of chicken.
Yum! Brands’ China Division saw sales increase 17 percent for the first quarter of 2014, while the sales for Yum! Brands’ KFC Division increased 4 percent.
“Yum! Brands is clearly on its way to a strong bounce-back year, delivering first-quarter EPS growth of 24 percent,” said David C. Novak, chairman and CEO of Yum! Brands. “Operating profit grew 80 percent in China, prior to foreign currency translation, driven by strong sales and margin growth. Looking ahead, we have significant building blocks in place in China and each of our divisions to drive sales and profit growth this year and beyond.”
Yum! Brands is also the parent company of Pizza Hut and Taco Bell.