Yum and McDonald's profits drop after supplier scandal

Chicken nuggets are sold at a McDonald's restaurant in Beijing on July 21, 2014.[Photo/China Daily]

Yum Brands Inc on Feb 4 reported a sales decline in established restaurants in China for the fourth-quarter of 2014, after the company's former supplier used expired meat and the so-called Fresh Soy Drink was found to be made with powder and water.

The company registered a 16 percent sales decline in its largest market for revenue and profit in the fourth quarter that ended Dec 27, according to agencies' reports.

Its restaurant sales in China fell in the third quarter after the supplier scandal broke on July 20.

Another US fast food chain, McDonald's Corp, influenced by the same supplier scandal, registered a 9 percent drop in consolidated operating income globally last year, and decreased by 20 percent in the fourth quarter.

The company announced in January that the drop was "primarily due to the impact of the previously-disclosed supplier issue in APMEA (Asia/Pacific, Middle East and Africa) and weak operating performance in the US."

In January, McDonald's announced its president, CEO and member of the board of directors, Don Thompson, will retire March 1 after nearly 25 years of service to the company. Steve Easterbrook will replace Thompson as president and CEO, and he was also elected to the board of directors.