New York, NY, United States (4E) – Yum! Brands Inc. reported a 13 percent drop in same-store sales in the third quarter following an investigation into one of its suppliers.
The company had earlier stated that problems with a supplier in China resulted to a significant negative impact on sales of Pizza Hut and KFC in China. The fast-food chain operator also said that despite sales beginning to bounce back, they remain negative.
Sales at both Pizza Hut and KFC in China suffered following a probe on OSI Group LLC for alleged changing of sell-by dates on food, according to Yum’s regulatory filing. The Louisville, Kentucky-based Yum also said it is considering taking legal action against OSI and its Shanghai Husi unit to demand for damages.
China, which also operates the Taco Bell brand, is Yum’s biggest market and the source for half of the company’s revenue.
The company reported in July a 19 percent increase in second-quarter profit, boosted by its strong sales and margins in China. Yum is set to release full results for its third quarter ended Aug. 31 next month.