Burger King Cuts Ties with Supplier in China Food Safety Scare

Burger King Worldwide Inc (NYSE:BKW) said on Thursday it would no longer buy products from OSI Group LLC suppliers in China, where the fast-food hamburger chain has about 200 restaurants.

OSI is the U.S. parent of Shanghai Husi Food, the factory at the heart of China's latest food safety scandal. That scare was triggered by a TV report alleging workers at Shanghai Husi Food used expired meat and doctored food production dates.

Regulators closed the plant on July 20. Police have detained five people, including Shanghai Husi's head and quality manager.

Burger King last week suspended the sale of any products from the Husi factories in Shanghai that supplied its restaurants and launched an investigation, Alix Salyers, a spokeswoman for the Miami-based chain, said in an email.

"As a precaution, we have decided that we will no longer source any products from Husi or any of its related entities throughout China," Salyers said.

Burger King's China outlets might experience some temporary menu item shortages as a result, she added.

Yum Brands Inc (NYSE:YUM) the biggest Western restaurant operator in China with 6,400 restaurants, warned on Wednesday that the scare caused "significant, negative" damage to sales at KFC and Pizza Hut restaurants in the period from July 20 through July 30.

After the scandal broke, Yum quickly cut all ties with OSI, which was not a significant supplier to the chain.

McDonald's Corp <MCD.N>, which has deep ties to OSI and was more dependent on the supplier, ended its relationship with OSI China. As a result, many of its 2,000 restaurants there have suffered meat shortages.

McDonald's Holdings Co Ltd <2702.T>, the Japanese unit of the world's biggest restaurant chain, also withdrew its earnings guidance for the year after the scandal forced it to switch to alternative chicken supplies.

OSI did not immediately respond to requests for comment.

(Reporting by Lisa Baertlein in Los Angeles. Editing by Andre Grenon)