Executives from the chain's parent, Yum Brands, estimate sales could drop 10% to 20% in the U.S. based on its experience in China. They recently revealed their contingency plan to a small group of analysts and investors. The program is spearheaded by Yum Senior VP-Public Relations Jonathan Blum and includes TV advertising to educate consumers that eating cooked chicken is perfectly safe.
"We, like others, are watching this closely and have been developing contingency plans which we hope we won't have to use," the company said in a statement. "The World Health Organization has been clear that you can't get the flu from cooked chicken, which is perfectly safe to eat."
Since chicken is a $50 billion retail business in this country-each American will eat 90 pounds this year-leading industry associations are also preparing educational efforts about poultry handling.
Larry Miller, restaurant analyst with Prudential Equity Group, said in a recent investors note that chicken demand is slipping 20% to 40% in parts of Europe and China on avian flu fears. In Guantang, Shanghai's largest poultry wholesale market, sales have dropped by as much as 80%.
Through October, 122 people in Asia have been confirmed infected from contact with the H5N1 flu strain, and half have died, according to the World Health Organization. Should the bird flu mutate and become transferable from human to human, the pandemic could spread rapidly, affecting up to one-third of the population and it could kill up to two million Americans, according to a new report and response plan from the department of Health and Human Services.
No cases have reached the U.S. and the virus is not known to have mutated to pass from human to human. Still, industry and health leaders have been bracing for the worst while trying to avoid inciting public panic.
In an Oct. 26 technical briefing from the U.S. Department of Agriculture, Dr. Richard Raymond, undersecretary for food safety, said that theoretically people can be infected by eating undercooked, diseased poultry. "That's why we continue to stress proper processing, handling and cooking," he said.
A spokeswoman for the U.S. Poultry & Egg Association said it is prepared to "provide technical support and advice for companies who need assistance in implementing or developing" educational plans. "We would respond in an appropriate manner based on the perceived need or actual situation."
The National Chicken Council has set up a Web site to address consumer concerns (avianinfluenzainfo.com) but has not taken other steps. "To date, we have not had any indications of great consumer concern about this," said Richard Lobb, communications director. "American consumers are not usually inclined to panic. They know the chicken they eat is not a hazard. It's pretty premature to put up posters saying your chicken is safe."
Poultry marketers Perdue Farms and Tyson Foods have prepared press releases offering information on avian flu, trying to allay concerns that eating U.S. poultry is a danger. Perdue noted that no one has been known to have been infected by eating poultry.
But the poultry industry is otherwise trying to keep its head low. "Why start making noise about a potential issue that Americans aren't that concerned about so far?" said Credit Suisse First Boston analyst Dave Nelson.
James McCoy, senior analyst at Mintel, said that having a communications plan such as Yum's is a good idea, but that implementing it could be tricky. "There is a risk if a company jumps the gun and starts screaming a bit too loud that something may be safe to eat because it may scare customers. If Yum came out now and said, `It's okay to eat chicken,' consumers probably would be wondering why are they telling us?"
Restaurant analysts were comforted. "While we believe that bird-flu-headline risk may increase in the near-term, we take some comfort in knowing that Yum management-particularly in China-is adept at handling these issues from a supply chain and consumer reaction standpoint," David Palmer, analyst with UBS Research, wrote in a Nov. 3 note. "This shows that Yum Brands management is adept at damage control ... in the face of a food scare."
NPD Group has been monitoring public awareness of bird flu in its Food Safety Monitor, and in recent weeks the number of U.S. adults aware of and concerned about avian flu grew 16%.
Of six restaurant marketers contacted about their plans, only a handful responded. "McDonald's has the highest food quality and safety standards in the industry, "the world's largest fast feeder said in a statement. Church's Chicken also said it has put together a crisis communication strategy, but called it "premature" to discuss.
Public-relations agency Edelman's crisis communications team is in the early stages of developing contingency programs for clients who may need advice on avian flu. "We're building on our experience with SARS and watching what's happening, reassuring people and being ready to help clients get ready for this," said Mike Seymour, global director-issues and crisis management. "The best thing to do is to have a plan in place ahead of it. With the research we've done, there are lot of [marketers] realizing the need to get geared up for this."
contributing: stephanie thompson