Yum Brands: It Could Be 9 Months Before We Recover in ChinaThe parent company of KFC and Pizza Hut says it knows what to expect, having faced its share of problems in the Chinese market.

ByKate Taylor

Opinions expressed by Entrepreneur contributors are their own.

When news broke this summer that one of its suppliers in China was using expired meat, Yum Brands knew things were about to get rocky – and not just from "worst-case scenario" research.

The parent company of KFC, Taco Bell and Pizza Hut had been there before. Inlate December 2012, Chinese food investigators found that Yum's suppliers had sold KFC higher-than-permitted levels of antibiotics. On the heels of the antibiotics investigation, avian flu swept China, further damaging consumer confidence and dragging down sales. In the first quarter of 2013, Yum same-store salesdeclined 20 percent in China.

7月最新的危机浮出水面,有蜜蜂n an unwelcome déjà vu for the company. In its third-quarter earnings report, released Tuesday, Yum saw a 14 percent same-store sales decline and an almost 10 percent drop in revenue in China. The company reported lower-than-expected profit and revenue, and now expects annual earnings-per-share growth of 6 to 10 percent, down from a previous projection of at least 20 percent.

Related:KFC and Pizza Hut Struggle in China Following Expired-Meat Scandal

In its earnings call on Wednesday, Yum Brands CEO David Novak said the company was relatively early in its recovery, and that it will take six to nine months to rebound from the events in China. "No two crises are ever the same," he said, in response to a question on Yum's 2014 and 2012 chicken-supplier scandals. "However, I would say this trend is broadly in line with what we saw last time."

McDonald's, which was and (unlike Yum Brands) continues to be supplied by the same meat company, has also struggled to bring in customers since the scandal unfolded.

This time around, Yum says it was able to take swifter action. The fast-food conglomerate responded especially speedily to social media outcry. "I can't say we'll never have an incident like this again," Novak said in the call. "But I can say we get stronger."

Just before the latest scandal, Yum was on a roll, especially in China. The company started off 2014 with two strong quarters driven bysuccess in China, and announced plans to open at least 700 restaurants there this year. China's rapidly growing middle class andsupersized slice of the global economymake it a huge opportunity for Yum, which currently operates more than 4,600 KFCs and 1,300 Pizza Huts there.

Related:Why China Is Just as Important as Breakfast in the Fast-Food Wars

Kate Taylor

Reporter

Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.

Editor's Pick

Related Topics

Business Solutions

This PDF Tool Lets You Edit and More — and It's Just $30 Through EOD Today

It's the last day to get this handy productivity tool.

领导

Young Workers Don't Want to Become Managers — and This Study Uncovers the Reason Why.

The average person has no interest in becoming a manager anymore, and the missing middle is putting companies at risk.

Business News

Jeff Bezos Becomes His Own Neighbor, Purchases $78 Million Florida Mansion Next Door

The billionaire bought another house in the same Florida neighborhood in August.

Business Solutions

Grab Microsoft Office for Windows with Windows 11 Pro for Just $60

An inexpensive upgrade to help you work more efficiently.