Following reports last week that rat meat is being sold as lamb, Shanghai authorities are testing the mislabeled mutton from a wholesaler which supplies a chain of hot pot restaurants run by U.S. fast food firm Yum Brands, according to reports.
Chinese authorities are in the midst of a major food-safety crackdown. Police recently arrested 904 people who allegedly sold adulterated and mislabeled meat products, according to a report from the China's official Xinhua News Agency. While mixing lamb or various meats with other meats and food products isn't illegal, the ingredients must be clearly labeled.
Shanghai food safety inspectors are investigating a wholesale mutton supplier for mislabeled dates on some of its meat, saying the invoices indicated it has already been sold to several restaurants, including some Little Sheep locations, according to a Wall Street Journal report.
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.
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.
The company said it expects same-store sales for April to decline 30%, and the issues have caused it to anticipate a double-digit decline in earnings per share this year.
Food safety is a major issue in China, where public anxiety over cases of fake or toxic food can spread quickly. Earlier this year, 20,000 dead pigs were found floating down the Huangpu River, a main source of water for Shanghai. That was followed by thousands of dead ducks in the Nanhe River in the southwest province of Sichuan. There was also a high-profile scandal involving the use of melamine in baby milk formula in 2008.
