Feb 5 KFC parent Yum Brands Inc on
Tuesday said time, not more advertising spending, is the cure
for a steep sales decline at its restaurants in China sparked by
a food safety scare in the country that accounts for more than
half of the fast-food operator's overall sales.
"We totally underestimated the impact of this incident," Yum
Chief Executive David Novak said on a conference call with
Customers began shunning Yum's China restaurants in late
December after news reports and investigations focused on
chemical residue found in a small portion of its chicken supply.
The company was not fined by food safety authorities.
Yum quickly responded with free beverage and ice cream
promotions, to little effect, said Novak, who added that Yum
does not plan to increase its already significant advertising
spending in China.
"There's not a whole lot we can do right now that's going to
turn the tide. We need some time," said Novak. "We could be
wasting a lot of money doing marketing right now."
Executives said Yum is refining and strengthening its food
safety standards. It plans to begin an aggressive marketing
campaign after the Chinese New Year on Feb. 10 to restore KFC's
The company also will report monthly sales at its
established restaurants in China until business there recovers,
Chief Financial Officer Patrick Grismer said on the call.