Yum Brands severed ties with OSI Group after Shanghai police detained five people from the supplier's China meat-processing factory at the center of a food-safety scare that has ensnared several major Western brands.
Shanghai police said on Wednesday the five individuals being held included the head of Shanghai Husi Food Co as well as its quality manager.
"Yum China has decided to immediately terminate all procurement from OSI China," including Shanghai Husi, Yum said in a statement.
OSI China and its Shanghai Husi business are part of Aurora, Illinois-based OSI Group, which said in a statement that local Chinese authorities have inspected all of its other facilities in China and found no issues.
Based on that statement, McDonald's said it was maintaining its relationship with OSI Group.
The world's biggest hamburger chain, which has just over 2,000 restaurants in China, said it would transfer its business in affected markets to Husi's new plant in the eastern central province of Henan. And, until that process is completed, McDonald's said it would continue to buy food from Husi's factory in the northern province of Hebei.
OSI Group Chairman and Chief Executive Officer Sheldon Lavin apologized to its China customers in a statement on Wednesday and reiterated that he has teams on the ground to address the problems.
"What happened at Husi Shanghai is completely unacceptable," Lavin said. "We will bear the responsibility of these missteps, and will make sure that they never happen again."
KFC and Pizza Hut parent Yum, McDonald's and coffee chain Starbucks are among the global brands that pulled products from their outlets after the news broke that Shanghai Husi supplied expired meat to clients in China as well as in Japan, in the latest in a series of food scandals in the country.
Earlier, the official Xinhua news agency cited the Shanghai food and drug watchdog as saying that food-safety violations at Shanghai Husi were company-led rather than the acts of individuals.
In its statement, Yum said: "It is difficult to believe and completely unacceptable that the management of Shanghai Husi ... would oversee and organize illegal and dishonest operations."