McDonald's is standing by a troubled supplier, even after allegations the company processed tainted and expired meat in China.
Chinese authorities this week suspended operations at a Shanghai Husi food plant, a subsidiary of Illinois-based OSI Group. The government intervened after a Chinese broadcaster aired footage of workers using their bare hands at a Husi factory to process expired meat, and even food that had fallen on the floor.
Five people have been detained as part of an investigation into the matter, according to state media.
The tainted meat has affected McDonald's outlets in China and Japan. The scandal widened further on Friday, when McNuggets and other products were pulled from stores in Hong Kong.
While many of its fast food rivals have rushed to cut ties with OSI, McDonald's said it will continue to do business with the supplier. The American fast food chain will shift its sourcing to a Husi plant in Hebei, before fully transitioning to a new facility in Henan.
McDonald's(MCD) shares have fallen 3.7% this week.
Local regulators have inspected OSI's other factories in China, and found no issues, OSI chief executive and owner Sheldon Lavin said in a statement. OSI has been a McDonald's supplier in China since 1992, and the company has extensive operations in the country.
Lavin has apologized for the company's actions, saying they are "completely unacceptable."
"I will not try and defend it or explain it," he said in a statement. "It was terribly wrong, and I am appalled that it ever happened in the company that I own."