Chinese officials shut down a U.S.-owned food processor after local media reported that it had been selling expired meat to McDonald's, KFC and other restaurant chains.
China's latest food scandal broke after Dragon TV reported that Shanghai Husi Food Co., owned by OSI Group of Aurora, Ill., had taken old beef and chicken and repackaged it with new expiration dates. The station said the meat was sold to McDonald's, KFC and Pizza Hut restaurants.
McDonald's Corp. and Yum Brands Inc., which owns KFC and Pizza Hut, issued statements Monday apologizing to customers and said they immediately stopped using meat from the supplier. Both companies said they were conducting their own investigations.
"If confirmed, the practices outlined in the report are completely unacceptable to McDonald’s," the Oak Brook, Ill., company said, saying it strives for "strict compliance" with consumer safety laws and regulations and has "zero tolerance for illegal behavior."
The Shanghai Food and Drug Administration closed the supplier's plant Sunday after the TV report showed workers picking up meat that fell on the floor, as well as mixing meat beyond its expiration date with fresh meat.
The news is the latest report of food-safety issues in China. Six babies died in 2008 after officials discovered that the industrial chemical melamine had been illegally added to dairy products. Chinese officials recently scolded Wal-Mart after donkey meat in some stores was found to contain fox meat. Wal-Mart also came under fire for selling expired duck meat in 2011.
The latest scandal could hurt Yum's recovery from a 2012 scandal that followed a Chinese state TV report that the KFC and McDonald's used chicken pumped with excessive amounts of antibiotics. Yum's sales in China dropped almost 40% after the 2012 report and only recently started to rebound.
"Chinese consumers have been through several round of food scares and they are getting tired of these problems,” said John Gordon, founder of Pacific Management Consulting Group and who covers restaurant supply chains. “It seems like there is a scandal every year and that becomes troublesome.”
Yum has more than 6,300 restaurants in China, its No. 1 market, and plans to open 700 more restaurants there this year.
OSI has about 60 manufacturing facilities worldwide and has been supplying McDonald's in China since 1992 and Yum since 2008, according to its website.
The food producer said it was "appalled" by the report on its factory, adding in a statement posted on its Chinese website that it was "dealing with the issue directly and quickly."
"The company has formed an investigation team, is fully cooperating with inspections being conducted by relevant, supervising government agencies, and is also conducting its own internal review," the company said.
Husi Food also supplies Burger King, Papa John's Pizza and Starbucks.
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