Following the launch of "Operation Thunder" and a chicken-themed poetry contest, fast feeder KFC appears to be recovering from a food safety crisis in its most important market.
Parent company Yum Brands announced this week that same-restaurant sales in China were down 20% in January and February 2013, better than the 25% plunge previously forecasted. KFC China sales were flat in February, after sliding 41% in January. The news sent its stock price soaring.
Trouble started in November and December 2012, when Chinese media reported that a few KFC suppliers provided chickens pumped full of hormones and antibiotics. Consumers were horrified to learn of birds raised to maturity in just 45 days.
At the time, Yum said it was cooperating with investigators and that its products were safe. It pointed out 45-day-old chickens are the industry norm. But Sam Su, Yum's China Chairman-CEO, didn't issue an apology until January, as consumers were widely turning away from the American chain that they expected should have better quality products than local eateries. It was a major crisis for Yum Brands, which earns about half its overall revenue in China.
In recent weeks, KFC has begun unfolding a campaign to reinforce its food safety bona fides. Dubbed "Operation Thunder," it includes a mini-site detailing steps the company will take to ensure the safety of its chicken, including working with only the best suppliers and stepping up coordination with regulators. It also pledged to better inform consumers about product safety issues.
Meanwhile, KFC kicked off a poetry contest on social media. The company asked fans to pen poems that include the phrase, "The chickens are innocent," laying the blame on illicit drug use at the farms. Best poem wins an iPad mini.
"After a slow start in reacting to the crisis late last year, KFC has taken on a more active approach to social media to face the issue directly. They have increased activity on their own Weibo and RenRen accounts, including responding to many of the comments about the crisis and by engaging media key opinion leaders. They will share news articles about the crisis on their Weibo account which in turn creates more buzz," said Sam Flemming, founder and chairman of Shanghai-based social-media research and consulting firm CIC.
Though crisis communication plans typically call for striking hard and fast, Yum CEO David Novak said in early February there was no need to rush into a marketing campaign. "We could be wasting a lot of money right now doing marketing," he said. "We need to give it time."
One analyst pointed out that a complex internal ecosystem could be part of the reason for Yum's slow response.
"China is extremely important to KFC and Yum Brands globally. It's the tail that wags the dog. Whatever you consider worth doing in China in terms of crisis response, you're going to have people second-guessing you from here to headquarters," said David Wolf, managing director of Allison+Partners' Global China Practice.
"Usually it means people are going to take a little extra time to determine how to respond to it. It's a reason, not an excuse. The company has to step back and say, 'In the future if this thing happens, how do we respond in the space of 24 to 48 hours or less, rather than two months,'" he said.
One KFC customer in Shanghai shrugged off concerns about food quality.
"If you worried about every food safety scandal in China, then you would never eat. I'm used to hearing about all these problems," said 24-year-old teacher Guo Zilong, snacking on sweet red bean pies at a KFC in central Shanghai today.
Indeed, drug-laced chicken seems to pale in comparison to China's latest safety scandal -- thousands of dead pigs were found this week floating in a river that's a major source of Shanghai's tap water.
Brought to you by: The Trade Desk