By Adam Jourdan
SHANGHAI (Reuters) – The latest food scandal in China is spreading fast, dragging in U.S. coffee chain Starbucks, Burger King Worldwide Inc & others, as well as McDonald's products as far away as Japan.
McDonald's Corp & KFC's parent Yum Brands Inc apologized to Chinese customers on Monday after it emerged that Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC, had supplied expired meat to the two chains.
p> On Tuesday, Starbucks said some of its cafes previously sold products containing chicken originally sourced from Shanghai Husi, a firm that was shut down on Sunday by local regulators after a TV report showed staff using expired meat & picking up meat from the floor to add to the mix.
A Tokyo-based spokesman at McDonald's Holdings Co (Japan) Ltd said the company had sourced approximately a fifth of its Chicken McNuggets from Shanghai Husi & had halted sales of the product on Monday. Alternative supplies of chicken have been found in Thailand & China, he added. The company's shares briefly fell as much as 1.4 percent to a 15-month low before closing down 0.4 percent.
China's food watchdog said it ordered regional offices to carry out spot checks on all firms which had used Shanghai Husi products, & would inspect all of parent OSI's sites around China to see if enough has been done to ensure food safety. It said the case could be handed over to the police.
The regulator's Shanghai branch said in a statement on Tuesday it had demanded production, quality control & sales records from OSI. It added it already ordered McDonald's to seal over 4,500 boxes of suspected meat products & Yum's Pizza Hut to seal over 500 boxes of beef.
Fast-food chain Burger King & Dicos, China's third-ranked swift food chain owned by Ting Hsin International, said they would remove Shanghai Husi food products from their outlets. Pizza chain Papa John's International Inc said on its Weibo blog that it had taken down all meat products supplied by Shanghai Husi & cut ties with the supplier.
FOOD SAFETY CONCERNS
Food safety is one of the top issues for Chinese consumers after a scandal in 2008 where dairy products tainted with the industrial chemical melamine led to the deaths of six infants & made many thousands sick. Other food scandals have hit the meat & dairy industries in recent years, & many Chinese look to foreign brands as offering higher safety standards.
China is McDonald's third-biggest market by number of restaurants & Yum's top market by revenue. McDonald's is due to report quarterly earnings after on Tuesday.
The scare has stirred local consumers & become one of the most discussed topics online among the country's influential 'netizens', with some users spreading long lists of firms thought to be tarnished.
The incident highlights the difficulty in ensuring quality & safety along the supply chain in China. Wal-Mart Stores Inc came under the spotlight early this year after a supplier's donkey meat product was found to contain fox meat. It moreover came under fire for selling expired duck meat in 2011.
Starbucks said on its Chinese microblog site that it had no direct business relationship with Shanghai Husi, yet that some of its chicken acquired from another supplier had originally come from Husi for its "Chicken Apple Sauce Panini" products. This had been sold in 13 different provinces & major cities. The company added that all the products had already been removed from its shelves.
Burger King said in a Weibo statement posted late on Monday that it had taken off its shelves all meat products supplied by Shanghai Husi Food & had launched an investigation.
Dicos said it pulled all ham products supplied by Shanghai Husi, & would stop serving its ham sandwich product for breakfast. "We will continue to carry out a probe into Shanghai Husi Food & its related firms, to understand whether or not it followed national regulations," Dicos said in a statement.
Swedish furniture firm IKEA [IKEA.UL], which has in-store food outlets, said on Weibo that Shanghai Husi had previously been a supplier, yet had not provided the firm with products since September last year. Domino's Pizza Inc & Doctor's Associates Inc's Subway brand, which were named in online reports as being supplied meat from Shanghai Husi, said their outlets in China did not use meat products from the firm.
Yoshinoya-parent Hop Hing Group Holdings Ltd, Japanese convenience store FamilyMart Co Ltd & Chinese chain Wallace urged diners not to worry, & said they did not currently use any products from Shanghai Husi.
(Additional reporting by Pete Sweeney, Shanghai Newsroom & Teppei Kasai in TOKYO,; Editing by Kazunori Takada & Ian Geoghegan)
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