Yum China sales recovering from food safety, bird flu concerns

KFC parent Yum Brands has reported a smaller than expected decline in June sales at established restaurants in China, showing signs of recovery after sales were drastically hit by a food safety scare and a bird flu outbreak.

The company posted an estimated 10 per cent drop in June sales - a smaller decline than in May when sales began to moderate. June results from China, the company’s most important business unit, will be recorded in the current third quarter.

The June sales decline was less than the 12.2 per cent fall expected on average of 20 analyst estimates compiled by Consensus Metrix. The fast-food operator gets more than half of its overall sales in China, where most of its nearly 6,000 restaurants are KFCs.

In May, Yum’s China sales fell an estimated 19 per cent.

“China sales are recovering as expected. The extensive media surrounding Avian flu in China has subsided and same-store sales at KFC are clearly improving,” Chief Executive David Novak said in a statement.

“As KFC sales continue to recover, we expect to have solid momentum in China heading into next year,” Novak said.

The company, whose other fast-food chains include Taco Bell and Pizza Hut, expects China restaurant sales to start growing in the fourth quarter.