New Zealand fastfood company Restaurant Brands, has said that it is to switch chicken suppliers from 2004 to reduce its costs by at least NZ$5m (US$2.6m) a year.

The company, which operates the KFC franchise in New Zealand, said it would change its chicken supplier from HJ Heinz subsidiary Tegel to Inghams following a competitive tender.

Restaurant Brands said it currently spends around $40m a year on chicken and changing suppliers would reduce that cost by more than $5m each year for the seven-year term of the new contract.

The company recently reported a 10% rise in third-quarter sales but said sales at its fastfood chain KFC fell 4.4% after problems with sub-standard supplies led to a promotion being withdrawn, reported Reuters.