Meat supplier to McDonald’s and KFC suspended in Shanghai for supplying rotten meat

Beijing, 21 July-2014, SCMP: Fast-food chains McDonald’s, KFC and Pizza Hut have suspended orders from a Shanghai-based supplier after allegations that the company was using rotten meat to make fast-food products.

Meat supplier to McDonald’s and KFC suspended in Shanghai for supplying rotten meat

Meat supplier to McDonald's and KFC suspended in Shanghai for supplying rotten meat

Screenshot from the Dragon TV report on Shanghai Husi Food Company.

McDonald’s and Yum Brands, the owner of the KFC and Pizza Hut franchises, said they had stopped sourcing meat from supplier Shanghai Husi Food Company. Both companies said their restaurants in China could now face a shortage of certain products. McDonald’s apologised.

Yum identified its sausage and egg burger and a ’spicy roasted burger’ as being affected, while McDonald’s did not specify any products. KFC said it only used Husi’s produce in some branches in Fujian province, the franchise said in a Weibo post.

McDonald’s and Yum also said they were investigating the matter. The Chinese fast-food chain Dicos also said it has taken breakfast sandwiches from its menu in the wake of the report.

Swedish retailer IKEA also said it has bought Husi chicken meat between September 2012 and August 2013, a spokesperson told the South China Morning Post.

The companies’ statements, posted on Weibo, followed a news report on Shanghai-based Dragon TV alleging that Husi was falsifying the expiry date on some of the meat products sold to the international fast-food chains.

The report featured video footage of a meat processing factory run by the company, showing staff picking up food from the floor and throwing it into processing machines.

Discarded Chicken McNuggets, a McDonald’s staple food offer, could be seen being reprocessed until they passed inspection.

The report also showed an email from company management, which allegedly asked employees to extend the expiry date of 10 tonnes of frozen beef. The meat, reportedly already green and odorous, was reprocessed, refrozen and repackaged with a new expiry date, the report alleged.

The report indicated that clients did not know about the practices at the factory.

When a group of McDonald’s inspectors visited the factory in May, the usual blue bags containing discarded food had disappeared from the production chain. “We can’t add them [back] during the inspection,” a staffer can be heard telling a Dragon TV reporter, who worked there undercover.

Workers have nothing to do at the workshop of Shanghai Husi Food Company. Photo: Xinhua

“If they knew about it, they would certainly not allow us adding [discarded food]. If we keep adding [discarded food], they’ll cancel the order.”

The reporter filmed workers bringing the blue bags back at the end of the inspection.

Xinhua said Shanghai’s Food and Drug Administration investigators visited the processing facility in the city’s Jiading district on Sunday evening, but were stopped by security guards until police assisted in their inspection.

The agency said it had closed the processing facility overnight and seized suspected raw food items. The agency ordered clients to take the factory’s products off their shelves, it said in a microblog post.

Yang Liqun, general manager of deep processing with OSI China, told Xinhua that the company had a strict quality control system.

The factory was licensed to export to Hong Kong and Japan, according to its website.

Company staffers reached on the phone declined to say whether any expired meat was sold to Hong Kong clients. The Food and Environmental Hygiene Department declined to comment on the matter.

McDonald’s Hong Kong does not receive any products from the factory in question, a company spokesperson told the South China Morning Post.

Husi is the China-based subsidiary of the OSI Group, an Illinois-based food processing conglomerate. In China, OSI sells beef, chicken, pork, vegetables and noodles, according to its homepage.

The Shanghai-based factory processes 25,000 tonnes of food annually, according to its own figures. Earlier this year, it received a food safety award from Jiading district.

The report was the result of a two-month long investigation, in which a Dragon TV reporter worked and secretly filmed at the food processing facility, Dragon TV said.

McDonald’s has about 2,000 restaurants in China, employing some 100,000 people, according to its website. Yum has 6,200 branches in China, according to its 2013 annual report. The company made almost half its revenue in China. IKEA has 16 stores in China.

For James Button, director of the Shanghai-based consultancy Smith Street, the Husi case will make it more difficult for international brands like McDonald’s and KFC to compete for costumers in China.

“When they first entered the market, they offered unique experiences in terms of novel food choices, clean environment and perceived higher quality and safety vs. other options,” he wrote in an email. “This latest scandal is yet another reminder to consumers that no one is above food quality issues in China.”