Bird flu scare in China: Bad news for KFC

Empty tables at a KFC store on West Nanjing Road in the bustling commercial district of Shanghai during the lunch hour on Monday, the day after poultry markets throughout Shanghai were shut down to prevent the spread of H7N9, a new strain of avian influenza.

It's noon at the KFC in the heart of Shanghai’s busiest shopping district on Nanjing Road. Half the tables are empty. It's a highly unusual scene at this particular location, surrounded by dozens of glass towers full of office workers.

KFC’s business appears to be in a bird flu funk. "I was a little scared when I walked in," says Ma Xiaobin, one of the few customers here. "There’s hardly anyone here because of the bird flu. I asked if they had any beef products. They didn’t. Other customers were eating chicken burgers, so I ordered one of those."

Health officials believe the new strain of bird flu is being passed on by live poultry, not cooked poultry. Still, James McGregor, author of "One Billion Customers," says Chinese consumers don’t take chances when it comes to food safety. McGregor says the threat of a bird flu pandemic is going to hurt KFC parent company YUM! Brands, which earns half its profits from the China market alone.

“What’s difficult for YUM! is that China has become such a huge portion of their global earnings," says McGregor. "And China is a topsy-turvy market where you get hit by politics, you get hit by disease, and you get hit by competitors going after you that they can use the local media to put out bad stuff about you that’s not true.”

If history is any indication, KFC will likely bounce back. In 2003 during the SARS outbreak in China, KFC’s sales dipped by 30 percent for a few weeks before making a full recovery.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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