Yum said it would take legal action against both companies.
The US-based fast-food giant has also been struggling to maintain market share in its home country, and has unveiled new menu options at Taco Bell to attract consumers.
Its Pizza Hut brand has also resorted to offering large discounts.
Yum is now looking to expand into emerging markets in Latin America and Africa. This year, it opened its first KFC outlets in Bolivia and its first Pizza Hut in South Africa.
On its website, Yum says it has opened over five new restaurants per day outside of the US.
“It is difficult to confidently forecast the exact trajectory of China sales. In our experience, sales typically take six to nine months to recover from these types of events.”
There have been a range of food scares in China in recent years, ranging from tainted milk to gutter oil being recycled and sold.
As a result, Chinese consumers have traditionally flocked to Western restaurants such as KFC because they were deemed safer to eat at.
However, two food scares – the first in December 2012 – and a bird flu outbreak have hurt Yum’s profits.
Earlier this year, it cut ties with meat supplier Shanghai Husi and its parent company, OSI Group, after a local television report accused it of altering expiration dates and selling old meat.