OSI Shanghai plant sold expired meat to McDonald's, KFC, Burger King — Yum China 12% drop

Shanghai Husi Food Co., a subsidiary of US-based global meat supplier OSI Group, supplied processed meat to every major fast-food chain in China. In July 2014, undercover footage from Dragon TV showed workers at the Shanghai plant collecting meat from the factory floor, repackaging expired meat with new use-by dates, and mixing meat that had been stored beyond its expiration date by up to 18 months into fresh batches. Workers described meat that had gone bad as 'stinky' and said it was concealed by mixing it with non-expired product.

The fallout was immediate. Shanghai food safety regulators raided the plant on 20 July 2014. McDonald’s, Yum China (KFC, Pizza Hut), Burger King and Starbucks all stopped sourcing from Shanghai Husi, forcing menu shortages across thousands of outlets. The disruption spread beyond China: McDonald’s Hong Kong and Japan also halted sales of chicken products supplied by the plant. Yum China’s same-store sales fell 12% in the third quarter of 2014, and McDonald’s China reported a significant sales decline that persisted for months.

The legal reckoning took nearly two years. In November 2014, Chinese authorities fined OSI Group a total of 24.28 million yuan (about $3.9 million). In March 2016, the Jiading District People’s Court in Shanghai found Shanghai Husi and six individuals guilty of producing and selling substandard food. The company was fined 2.4 million yuan; five managers received prison sentences of two to three years, suspended, and two others received suspended sentences. OSI Group said the verdict was unjust and that general media coverage had influenced the court.