It may officially be time to give up fast-food. Just as restaurant chains like McDonald’s (NYSE:MCD) and Yum! Brands (NYSE:YUM) (parent company for brands like Pizza Hut, KFC, and Taco Bell) were beginning to salvage its reputation in foreign markets after a 2012 food scandal, another one has broken. A news report recently released on a local Chinese channel showed workers at a meat supplier mixing product that had been dropped on the floor, or that had passed its expiration date, back in with fresh meat.
Even as the restaurants firefight the situation and tender profound apologies to consumers, a serious question has emerged: will these chains ever be able to regain the trust of their customers in China, and for that matter, all over the world?
According to Reuters, the restaurants involved said that it immediately stopped using meat from the supplier, Shanghai Husi Food Co Ltd, a unit of Illinois-based OSI Group. McDonald’s maintains that the factory unit only served in restaurants in Shanghai, but the reputation damage extends beyond the borders of the city.
Regulators shut the Husi Food down on Sunday, and local food watchdogs are demanding that the company turn up production and sales records in addition to implement new quality controls. In the meantime, fast-food chains like Burger King (NYSE:BKW), Dicos, and Papa John’s (NASDAQ:PZZA) have shunned supplies from Husi Food, and Chinese authorities have gone as far as to order McDonald’s to seal over 4,500 boxes of meat products from the company, according to the South China Morning Post. Yum! Brands’ Pizza Hut was ordered to seal over 500 boxes of meat.
Though the restaurants have issued apologies, the impact of the scandal has already traveled halfway across the world. The news has been particularly rough for McDonald’s and Yum! Brands because of its size. KFC is China’s biggest restaurant chain with 4,000 outlets, according to the SCMP, and China is McDonald’s third largest market. Shares in both companies declined following the news.