After rough patch in China, Yum looks to repair image

Thu May 9, 2013 5:29pm EDT
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By Adam Jourdan

SHANGHAI (Reuters) - Yum Brands Inc (YUM.N: Quote), the largest foreign fast-food chain in China, is strengthening its media strategy in the country in a bid to win back customer loyalty after a series of food scares that decimated sales this year.

State media and social web sites criticized Yum's response to charges in December that there were too many chemicals in chicken dishes at its KFC restaurants. An avian flu scare earlier this year and reports of false mutton being sold in China have affected both its KFC and Little Sheep chains.

Same store sales in China have dropped sharply since the start of the year and Yum now expects April sales, set to be announced later on Friday, to decline an annual 30 percent.

U.S.-listed Yum, which has over 39,000 KFC, Pizza Hut and Taco Bell restaurants in more than 130 countries, has launched a campaign called "Operation Thunder" to reverse the loss of confidence in China, its biggest market.

It also appears to have a tie-up with Shanghai-based consultancy CIC, one of the largest social media management firms in China that harvests over 100 million consumer comments online every month from a range of Chinese social media sites.

Sam Flemming, the chief executive CIC, told Reuters he could not comment on Yum's media strategy because of a "client relationship" between his firm and the U.S.-listed chain.

In March, Flemming told trade journal "Ad Age" that after a slow response late last year, KFC has taken on a more active approach to social media.

A U.S.-based spokesman for Yum said he had no knowledge of the relationship with CIC, but said the firm was "in the process of implementing" a cutting-edge social media monitoring and analysis system that should be up and running by early June.   Continued...

A woman wearing a mask walks out of a KFC restaurant in Beijing, May 9, 2013. REUTERS/Kim Kyung-Hoon