Yum! Brands Inc.shares fell slightly Monday on reports that food safety regulators in China are launching a probe into a mutton supplier, though Yum says it is not one of the suppliers it uses.
"There is no evidence, none whatsoever, of any adulterated product anywhere in our system," said Yum spokesman Jonathan Blum.
"Little Sheep requires the purchase of high-quality mutton from only two suppliers. We regularly audit those suppliers and require franchisees only to purchase from those approved suppliers. There is no record anywhere in our system of anybody purchasing from this supplier in question, nor is there any evidence in our system of any adulterated product," he added.
Yum, the parent company of KFC, Pizza Hut and Taco Bell, acquired the Little Sheep hot pot restaurant chain in China in 2011. Yum said that Little Sheep, which has about 450 locations, gets mutton from "two approved suppliers," and that the wholesaler in question by the Chinese government is not one it uses.
Last Thursday, China's Ministry of Public Security announced that in February police arrested 63 people involved in selling rat meat mixed with mink, fox, gelatin, red food coloring and nitrates - as mutton.
According to a report in The Wall Street Journal, Yum! Brands has said that it does not purchase the brand of lamb being investigated in Shanghai. "After thorough examination, we've concluded that the merchant is not one of Little Sheep's suppliers and does not match any of our purchasing records."
Shares of Yum! Brands are down about 2.3% in premarket trading this morning at $67.34 in a 52-week range of $59.68 to $74.75.
Update: Includes comments from Yum! Brands Inc spokesman and a previous version of the article incorrectly connected the tainted food supplier to the Yum-owned chain KFC and Taco Bell instead of Little Sheep.
