Yum to lay out plans to tighten China safety, bring back diners

Sun Feb 24, 2013 7:55pm EST

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Feb 24 (Reuters) - Yum Brands Inc, aiming to reverse a steep drop in business at its KFC restaurants in China after a chicken safety scare, will outline in Beijing on Monday details of its strengthened food quality assurance program.

The effort is critical for Yum, which gets more than half of its overall sales from China, the world's fastest-growing major economy.

Diners began avoiding Yum's nearly 5,300 - mostly KFC - restaurants in December after news reports and government investigations in China focused on chemical residue found in a small portion of its chicken supply.

The company was not fined by China food safety authorities. It will also lay out plans to bring back diners, the company said.

Earlier this month, Yum reported a 6 percent decline in fourth-quarter 2012 sales at established restaurants in China.

It also forecast a surprisingly steep 25 percent drop in China same-restaurant sales for the first quarter, which includes only the months of January and February.

Yum warned that it expected a "mid-single digit" percentage decline in earnings per share for 2013, versus its previous call for growth of at least 10 percent.

Based on the trajectory of prior food safety scares in China, Yum expects KFC same-store sales in China to rise by the fourth quarter.

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