KFC falls victim to 'fowl play', needs internal audits more than PR

KFC said it stopped buying chickens from its supplier Liuhe Group in August. A China Central Television programme (CCTV) earlier this week revealed that the Shandong-based supplier had injected illegal drugs in chicken feed to fatten up the birds faster.

The CCTV report, which it said was based on a year of undercover reporting, stated that when farmers sent chickens to be slaughtered, workers would fabricate records about how they were raised before they were shipped off to the Yum Brands logistics centre in Shanghai.

“KFC attaches great importance to the contents of the media report and will actively cooperate with the relevant government departments’ investigation,” KFC said in a press statement. “If [we] find out that our suppliers have conducted any illegal activity, [we] will handle it strictly.”

"No crisis is isolated—this one comes from [raw material] sourcing," Elan Shou, senior vice-president and managing director of Ruder Finn China told Campaign Asia-Pacific. KFC's priorities should be to conduct an internal audit and build a future alert system regarding operational risks, she said. 

Edelman, KFC's digital public relations agency in China, declined to disclose how they are handling the crisis, citing a non-disclosure agreement.

KFC's Weibo homepage and official Chinese website have statements responding to the CCTV investigation, interspersed with adverts of value-meal promotions.

"PR statements can never end a crisis," Shou pointed out.

David Wolf, president and chief executive at Wolf Group Asia, said, "In the marketing mix of product, price, promotion and place, KFC is putting its current emphasis on the last at the moment, and that is the real issue. KFC's primary strategic focus right now is geographic expansion, ensuring that it is able to secure excellent locations in smaller fourth-, fifth- and sixth-tier cities in China. Given the real limits on company resources—even for a company as large as Yum Brands—this kind of all-out physical expansion is going to mean a lesser focus on other aspects of marketing."

However, Wolf argued that this is the correct path for KFC, as the company's long-term challenge is to seize and hold ground from McDonald's and other rivals.

He expects KFC to refocus attention on the health of the brand when "either their current spasm of expansion is over, or until the brand decline is causing noticeable dropoffs in same-store sales".

Another commentator, who wished to be anonymous, said the international fast food giant has "spared no effort in telling consumers how delicious or nutritious their products are in their various advertisements, but what it now needs most is a real sense of social responsibility and business ethics. However, expecting KFC to have a corporate conscience is tricky."

As early as 2010, according to the Shanghai Food Safety Office, third-party tests discovered that large doses of antibiotics were detected in Kentucky Fried Chicken's raw chickens. However, the firm did not immediately terminate its supplier contract with Shandong's Liuhe Group, but concealed the grim situation from the public, according to the authority.

KFC's vice-president and chief marketing officer for Asia, Vipul Chawla, did not respond to Campaign Asia-Pacific's emails and phone calls before publication time.