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China Probes Mutton Supplier in New Food Scare

Chinese lamb stew hot pot
Thomas Ruecker | Flickr Open | Getty Images
Chinese lamb stew hot pot

Shanghai authorities are testing mislabeled mutton from a wholesaler a government website said supplies a chain of hot pot restaurants run by U.S. fast food firm Yum Brands, the latest safety scare to taint China's food industry.

Acting on a tip, Shanghai food safety inspectors and police raided a wholesale market on Friday and found packages labelled "New Zealand mutton" at one supplier that had no production date or list of ingredients, according to a report on the website of the municipal food safety committee.

Invoices indicated that some of the meat had already been sold to several restaurants, including outlets of Yum-owned Little Sheep, the website said. The meat was being tested and results would be available in about a week, the report added.

Yum officials could not be reached by phone or email for comment on Monday. The Guangzhou Daily newspaper quoted an unidentified Yum official as saying Little Sheep did not procure meat from the supplier under investigation.

(Read More: Yum's China Sales Fall Sharply Amid Bird-Flu Scare)

The mislabeled meat crackdown follows media reports last week that police had bust a crime ring that had passed off more than $1 million in rat and small mammal meat as mutton. China's food industry has also been under pressure from a bird flu outbreak and other environmental concerns.

KFC parent Yum, which reaps more than a half of its overall sales in China, was embroiled in a food safety scare last year after news reports and government investigations focused on chemical residue found in a small portion of its chicken supply.

Sales at its established KFC restaurants in China fell 20 percent during the first quarter and Yum warned that fears surrounding the bird flu outbreak were still hurting its struggling sales.

Most of Yum's nearly 5,300 restaurants in China are KFCs. It also runs Pizza Hut.

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