Starbucks, Burger King, and Papa John’s all say they have had some products from meat supplier Husi Food Co., a Shanghai company, and removed them from their stores after Husi had been selling expired meat as fresh product to several major restaurant chains. According to reports, Hsui, repackaged the old meat and put new expiration dates on the packaging.
After Husi's food processing plant in Shanghai was sealed by the China Food and Drug Administration, the agency said Tuesday that inspectors also will look at its facilities and meat sources in five provinces in central, eastern and southern China, according to the Associated Press.
Starbucks Corp. says it removed sandwiches with chicken that originated at Husi, according to AP. Burger King Corp. says it stopped using hamburger it received from a supplier that used product from Husi, and Pizza restaurant chain Papa John's International Inc. also says it stopped using meat from Husi, the AP reports.
This investigation is one of several safety scares in recent memory. One of the most notable incidents was when melamine-contaminated milk powder sickened thousands of babies in 2008 and caused at least six infant deaths. That scandal raised questions about China’s business culture, especially how profits overshadow integrity in the race to create a market economy, as reported by the Monitor at the time.
In Japan, McDonald’s Corp. has stopped selling McNuggets at more than 1,300 outlets that used chicken from Husi, according to AP. McDonald’s and Yum! Brands, which owns KFC, Pizza Hut, and Taco Bell, became the first major food companies linked to Husi meat after Shanghai broadcaster Dragon TV reported that Husi repackaged old beef and chicken.
Expansion into China and other emerging markets is important for fast food companies. McDonald’s, which released its second quarter earnings report Tuesday, says it had strong comparable sales China, but continues to see weakness in its Japan market. In its Asia/Pacific, Middle East and Africa markets, McDonald’s saw comparable sales increase 1.1 percent but saw operating income decline 2 percent.
Yum! Brands’ Chinese branch saw system sales go up by 21 percent, with operating profit nearly doubling compared to last year, according to its second quarter earnings report. Yum! opened 104 restaurants in China, CEO David Novak says in the report, and the company is on track to open at least 700 restaurants in China this year.
As of right now, the meat supplier scandal hasn't caused a lot of damage, stocks-wise. McDonald's shares were down 1 percent to $96.58 Tuesday morning, and Yum! was up almost 1 percent to $74.86. Starbucks' shares were also up by 1.52 percent to $78.79, while Burger King was up 0.88 percent to $26.36.