Why KFC, McDonald���s Can Survive Even a Nasty Food Scare in China
BEIJING ( TheStreet) -- A pregnant woman we'll call Mrs. Lin was happy to chat about the latest McDonald's
What she said -- and ate -- suggests investors may want to think twice before concluding that the scare will hurt the wildly popular McDonald's or Yum! Brand's
Mrs. Lin, who didn't want her real name used, is a middle-class office worker whose baby is due in September. She'd heard about the Sunday night shutdown of a Shanghai meat plant that supplied McNuggets and similar products.
The shutdown followed a raid by Shanghai city government food inspectors, accompanied by state TV news crews, on the plant run by Husi Foods , a division of Illinois-based OSI Group . Inspectors cited the plant for processing food with outdated chicken and beef.
The CCTV and Dragon TV news reports stressed that the McNuggets assembly line floor was wet and dirty. The official Xinhua news agency and the Communist Party's People's Daily newspaper gave the story prominent play.
McDonald's and Yum! outlets in China responded by pulling some foods off menus. The companies also joined Husi in promising to cooperate with authorities as the food safety probe, which began in June, continues.
Mrs. Lin said she had no qualms about eating at KFC or any other American restaurant. Like most Chinese, she's familiar with China's long struggle with food safety problems and feels more trusting of American chain restaurants than Chinese eateries. That trust is strong despite a similar food safety scare that hit KFC and McDonald's in 2012, prompting a temporary dip in their China sales.
"You know, in China, it's hard to say whether any food in safe," she said. "I visited America for business in 2010. The food there seemed safe.
"Chinese food culture and American food culture are different," she said.
Eating at tables near Mrs. Lin were other office workers, groups of teen-agers, and mothers with children.
News of the Shanghai incident was a trending topic on the Sina Weibo microblog for most of the day Monday in China. By evening, though, the topics "KFC" and "McDonald's" were no longer in the top 20.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.