Expired Meat and No Nutrition: Is It Time to Give Up Fast-Food?
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.
But this is not the first time that fast-food chains like McDonald’s and KFC have come under the scanner for poor food safety and hygiene standards. Back in the U.S., more and more has been reported about poor food safety records. For example, according to a survey undertaken by NBC News last year — where the agency surveyed 100 outlets of the top 10 fast-food chains in U.S. across 38 states — more than 60 percent of all fast-food restaurants had at least one critical violation in the last year and a half.
Taco Bell had the least with 91 violations, followed by McDonald’s with 136 critical violations. Some of the McDonald’s outlets did not even have a certified food handler, according to the findings of the survey. KFC, according to the survey, had 157 violations, and Subways reportedly had 160 violations.
According to another research study carried out by the Center for Science in the Public Interest last year, researchers studied 3,498 meal combinations on kids’ menus at fast-food chains across the country and found that 97 percent of them fell short of minimal nutrition standards.
In China as well, consumers are increasingly losing the trust that American fast-food brands enjoyed at one point. Earlier this year, Wal-Mart (NYSE:WMT) came under regulatory fire after a supplier’s donkey meat product was found to contain fox meat, and in 2011 the retailer reportedly sold expired duck meat. Now, McDonald’s and Yum! have been found wanting in quality control and this may be too hazardous for consumers to go back to it again.
“I think this is going to be really challenging for both these firms,” Benjamin Cavender, Shanghai-based principal at China Market Research Group told Reuters on Monday. “I don’t know that this is something an apology can fix so easily, because at this point people don’t have a whole lot of trust that they have good systems in place,” he added.