US fast food giant Yum! Brands has apologised to customers of its Chinese KFC restaurants after a scandal over tainted chicken that dented sales at the popular chain.

The Chinese arm of the food empire, whose brands also include Pizza Hut, admitted it failed to inform authorities about tests showing high levels of antibiotics in chicken. It came after authorities launched a probe last month.

There is deep sensitivity in China to the issue of tainted food following a string of scandals, although foreign brands are normally more trusted and it is unusual for one to get embroiled in such a controversy.

"We did not take the initiative to inform the government about test results," Yum China's chairman and chief executive, Sam Su, said in the statement late Thursday.

"We feel regret for all the problems and I sincerely apologise to the public on behalf of the company," he said.

The company also pledged to improve the screening process of suppliers and communication with Chinese regulators, the statement said.

The scandal came to light when China's commercial hub of Shanghai and the northern province of Shanxi said last month that they were investigating KFC suppliers over claims of high levels of antibiotics.

The company said at the time it was cooperating with a government investigation into two poultry suppliers that provided chicken with "unapproved" levels of antibiotics.

The Shanghai government has said Yum was aware of the issue through testing by a third-party in 2010 and 2011 but did not report to the authorities. The company has already stopped using the local supplier, Liuhe Group.

The scandal has hit Yum's Chinese operations. It said this week sales in the key market were forecast to fall six percent in the fourth quarter of last year following the probe, instead of the previously expected four percent drop.

Nevertheless, Chinese consumers say they will continue to eat in KFC, which is still perceived as better quality than small, individually-owned restaurants.

China's agriculture ministry has said it was investigating reports that poultry producers were giving hormones and other supplements to chickens to make them grow faster, but it did not cite Yum.