McDonald’s Corp.’s share price up, halts purchases from a Chinese meat supplier along with Yum! Brands Inc.

McDonalds Corp. wrote in a microblog statement yesterday that it decided to stop purchasing meat products from a Shanghai-located supplier due to the fact that the supplier has faced allegations for selling chicken and beef after its expiration date. The supplier, called Shanghai Husi Food Co., is currently being investigated by authorities.

One of the employees, who work at Husi factory located in the Shanghai suburb of Jiading commented for the Financial Times: “We are working with relevant government departments and an investigation is under way.”

Yum! Brands Inc., which owns KFC and Pizza Hut restaurants, did the same, as explained in a microblog statement by Yum! Brands on June 20. The restaurant chains explained that their decision would result in some menu items shortages and also begged its customers for pardon for the inconvenience.

Xinhua News Agency revealed yesterday that government officials suspended the operations of Shanghai Husi after it was reported by a local Chinese media that the company was selling meat products past their expiration date to McDonalds, KFC and Pizza Hut. Both McDonalds Corp. and KFC used the company to supply their outlets located in Shanghai.

One of the analysts, who work at China Market Research Group – Mr Ben Cavendar commented on the information for the Financial Times: “Once the news gets out it is going to be difficult for them to convince Chinese consumers that [KFC] can put the needed checks in place on their suppliers.”

This is the second case in less than two years, when the two competitive fast-food restaurant chains have been affected by a food safety issue related to suppliers based in China. In December 2012 the authorities in Shanghai found a problem with high antibiotics levels in eight batches of chicken supplied to Yum Brand. McDonalds chain in China was also serviced by the same supplier at the time.

McDonalds Corp. was 0.63% up to close at 98.99 dollars per share on Friday, marking a one-year change of -1.19%. According to the information published on CNN Money, the 21 analysts offering 12-month price forecasts for McDonalds Corp. have a median target of 106.00, with a high estimate of 120.00 and a low estimate of 95.00. The median estimate represents a +7.08% increase from the last price of 98.99.