Spare a thought for Mickey D. Just when McDonald’s was successfully moving away from its burger-centric menu in China – which generally prefers chicken – along came bird flu to bedevil its new avian offerings.
And now that the US burger giant is trying to localise the menu further by introducing rice dishes – a couple of years after Yum’s KFC did the same thing – Chinese diners still seem unimpressed.
So it was the toxic chicken accusations afterall.
Shares in Yum! Brands fell more than 5 per cent in aftermarket trading on Monday after the inanely-punctuated US owner of KFC, Taco Bell and Pizza Hut said China sales fell more than expected.
Yum Brands, operator of KFC, Taco Bell and Pizza Hut, gave a robust defense of its business in China on Thursday, saying the surprise four per cent contraction it expects to see in its fourth quarter sales there is just a blip.
The company, which spent the last two decades conquering the Chinese fast food scene, blamed the sales stumble on the slowdown in the Chinese economy. Yet in a country where the fight for stomach share is fierce and diners are as picky as their tastes are fickle, there are reasons to think that Yum’s China woes go beyond the catch-all of weaker consumer spending.
Among the more glaring details in McDonald’s weaker-than-expected second-quarter results on Monday is the performance of its Asia-Pacific, Middle East and Africa division.
After seeing revenue from the division jump 18 per cent last year and 5.5 per cent in the first quarter, demand from these markets has ground to a screeching halt and was nearly flat for the three months to the end of June.
Like-for-like sales increased just 0.9 per cent, operating margins fell 170 basis points to 15.3 per cent and operating income dropped 2 per cent (although they increased 1 per cent on a constant currency basis).