U.S. Markets close in 5 hrs 18 mins

Yum's China Sales Bounce In Feb. After Chicken Scare

Yum Brands (YUM) reported positive February China sales late Monday, after a chicken health scare had sent diners and investors fleeing. Shares surged in after-hours trading.

Sales in Chinese restaurants open at least a year rose 2%, according to Yum Brands. February same-store sales were flat at KFC and rose 13% at Pizza Hut restaurants.

The later Chinese Lunar New Year helped offset plunging January sales. January-February comps fell 20%. Yum had predicted a 25% plunge.

Yum shares jumped 6% late, near the levels before the chicken health scandal broke in November.

Yum shares fell 8% from Dec. 17 to Dec. 21 after food safety officials in Shanghai found high levels of an antiviral drug used to treat Parkinson's disease in some samples of KFC chicken from 2010 and 2011. Levels of antibiotics and steroids were within legal limits.

Shares hit a low of 59.68 on Feb. 5 after Yum issued weak guidance due to its China woes.

The scandal is a warning to other multinationals that China's fast-growing middle class increasingly demands high health and safety standards, just like consumers in the developed world. But Yum's rapid recovery also suggests companies can bounce back if they react quickly.

Yum stopped ordering chicken from the tainted farms and complied with probes. It has run an ad campaign touting its changes.

McDonald's (MCD) China outlets also received chicken from the tainted farms. But unlike KFC, McDonald's is known primarily for its hamburgers.

Sales at McDonald's Asia/Pacific, Middle East and Africa region only fell 1.6% in February, vs. the 1.69% decline analysts expected.

McDonald's shares were little changed late after edging higher during Monday's regular session.

In January, Yum issued an apology to its customers, but many KFC fans wanted more and complained about the fast food restaurant's response on Sina's (SINA) Weibo, the Chinese version of Twitter.

Despite the outrage online, consumers are returning to the fast food chain as safety issues continue to plague restaurants and food companies in the world's most populous country.

In 2008 melamine was found in powdered milk, sickening more than 300,000 infants and killing six. Exploding watermelons were found in 2011 after farmers accidentally used a growth accelerator. In 2012 fake cooking oil was found in a factory.

This was the first time Yum released monthly same-store sales for its China division, which accounts for 50% of sales. Yum plans to continue to do so until the scandal dies down.