Yum, McDonald's in Shanghai food safety investigation

SHANGHAI, July 21 Sun Jul 20, 2014 9:21pm EDT

SHANGHAI, July 21 (Reuters) - U.S. fast food chains McDonald's Corp and Yum! Brands Inc said they will stop using products supplied by a local meat processor after a Shanghai regulator halted the firm's operations on Sunday over food safety concerns.

The move is a potential concern for the two brands, which are both now conducting their own investigation into the matter, since the pair were hit hard by a food safety scandal in China late in 2012. Yum, which apologised to Chinese consumers for any inconvenience caused in the latest case, suffered a sharp dive in profits early in 2013 after the safety concerns.

The Shanghai Food and Drug Administration (SFDA) halted the operations of Shanghai Husi Food Co., Ltd, a meat supplier suspected of providing meat that had passed its expiration date to China branches of McDonald's restaurants and Yum's KFC and Pizza Hut outlets, the Xinhua news agency reported on Sunday.

The SFDA inspected Shanghai Husi on Sunday evening after a local television channel broadcast a programme claiming an undercover reporter had seen the use of expired meat and poor hygiene practices in a local factory, local media said.

Yum and McDonald's both said they have stopped using meat products purchased from Shanghai Husi, according to statements posted on their official Weibo microblog sites.

(Reporting by Engen Tham and Adam Jourdan; Editing by Kenneth Maxwell)