According to Bloomberg Businessweek, CCTV has reported that the ice at a KFC restaurant in Beijing was found to be unsanitary. Initial reports indicate that the ice contained 20x more bacteria than the national limit and 13x more bacteria than toilet bowl water. The stock is down 90bps on the day.
We view this as a minor setback to YUM and maintain our bullish view on the long-term prospects of the company. However, it is important to note that the turn we foresee in 4Q same-store sales is at risk if this turns into a real public relations nightmare.
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