Chicken sold to KFC's parent Yum Brands Inc in China contained excessive levels of chemicals, the official Xinhua news agency reported on Friday, escalating a month-long food scare that has hit Yum's sales in its biggest market.
The Shanghai Municipal Food Safety Committee said KFC's checks on its suppliers were lax, and that it found excessive levels of chemical residue in some of the fast food chain's supplies, the report said.
The investigation has now been passed to authorities where the suppliers are based, Xinhua said, without elaborating.
Officials at the Food Safety Committee and Yum in China could not immediately be reached for comment.
Yum and McDonald's Corp's have come under intense scrutiny from local media since the official China Central Television reported in late December that some of the chicken supplied to them contained excess amounts of antiviral drugs and hormones used to accelerate growth.
On investigating, the Shanghai Food and Drug Administration found the levels of antibiotics and steroids in KFC chicken were safe, though the watchdog found a suspicious level of an antiviral drug in one of the eight samples tested.
Yum warned earlier in the month that sales in China - where it earns over half of its worldwide revenue and operating profit - shrank more than expected in the fourth quarter, citing bad publicity from a government review of its chicken supply.
Yum has apologized to customers in China over its handling of the food scare.
McDonald's Chief Executive Don Thompson said on Wednesday the chicken scare "minimally impacted" McDonald's sales in China during the fourth quarter and continues to hurt business this year.
(Reporting by Kazunori Takada and Shanghai newsroom; Editing by Daniel Magnowski)