Bird flu is threatening to throw KFC's owner Yum Brands, the biggest foreign fast-food chain operator in China, off its 11-year course of double-digit profit growth.
The US-listed company warned that the deadly avian flu outbreak would have a "significant, negative impact" on sales at KFC stores in China in April.
The new strain of bird flu has already led to nine deaths, while dozens more have fallen ill.
China accounts for more than half of global sales at Yum, which also owns Pizza Hut and Taco Bell.
The group is the largest Western fast-food operator in China with about 5,300 locations.
In March, Yum said sales at restaurants in China open for at least a year fell 13 per cent – including a 16 per cent drop at KFC.
"KFC has got off to a very bad start this year, [and] there's also much stiffer competition from local quick-service restaurants firms," said Frank Gibson, a retail consultant in Shanghai.