According to the Shanghai Municipal Food and Drug Administration, Shanghai Husi Food Company and the Chinese office of its American parent, OSI Group, were fined roughly RMB17m (US$2.6m) and RMB7.3m (US$1m) respectively.
Husi also had its food production license revoked while products and illegal profits will be confiscated.
The names of the two companies were also added to a local blacklist for businesses that have committed serious food safety violations. The move means Husi and OSI China are likely to face stricter regulations.
Husi is a former supplier to major fast-food chains including McDonald’s, KFC and Pizza Hut.
It was exposed in a television for supplying products with reprocessed, expired meat to quick-service restaurants across China.
In February, a Shanghai court ordered Husi's Shanghai and Hebei plants to pay fines worth RMB2.4m (US$360,000), and sentenced 10 people to prison terms for the incident.
In a statement, the two companies accepted the latest punishment.
More stories from China…
Shanghai gets tough with lifetime bans for food-safety violators
Shanghai has announced it will hand out new penalties to food-safety violators, with some crimes even leading to life bands from the food industry.
The move is the result of a draft review by the Standing Committee of the city’s Municipal People's Congress of local measures on safeguarding food safety.
The draft, which contains measures to implement the national law on food safety, urged "the strictest punishment" for violators.
It said that any food companies found operating against the law or caught operating irresponsibly should be barred from the business.
Anyone implicated in illegal business should be banned from the food industry for life, the draft recommended.
It also highlighted the use of a credit system through which local food watchdogs can tighten their supervision of food manufacturers and online platforms. Such information would be made public, the draft said.
Authorities should enhance supervision against those with poor credit, according to the law.
China’s restaurant chains show good revenues in a growing market
China’s organised food-service industry has been growing at a rate of over 11% over the last two years and was worth more than RMB3.2bn (US$480m) in 2015.
That is according to a market report on the catering industry by Research & Markets, which also found that the fast-food market is maintaining strong momentum. The market researcher assessed that the overall food-service industry will have grown to over RMB3.5bn by the end of this year.
Mass catering accounts for some 80% of China’s food-service revenues, making it key industry. Demand is currently being guided by consumer demand for safe foods, healthy products and specialty goods.
Within this segment, small and niche restaurants, chain outlets selling single products, weddings and shopping mall catering businesses form the basis for future trends.
New industrial models are also experiencing rapid growth, with fast food, group buying, hot pot and leisure catering business all experiencing a boom, Research & Markets found.
They also identified that snack foods, community catering, shopping mall food courts, take-away and health foods were also among the growth segments.
The food service segment looks like it will soon be seeing 18% annual growth as more than 100 major different domestic catering groups evolve distinctive regional characteristics and account for annual turnover of over RMB1bn alone.
Employing over 25m workers, the food service segment is expected to grow by 800 staple food processing and distributing centres, and 160,000 outlets, according to Research & Markets.
Market update: Fishmeal prices fall as season end nears
Chinese fishmeal prices have fallen by 9% in the last month due to a decline in domestic demand as the summer season for aquaculture approaches an end.
According to Mintec, the commodities researcher, demand for fishmeal is the strongest at the start of the season, but fades gradually towards the end as buyers have already made their purchases.
Buyers have also been holding off purchasing large volumes of imported fish meal, mainly from Peru, at Chinese ports, causing a build-up of stocks at port and weakening prices.
Peru is the world’s largest fish meal producer and exporter. Production in Peru has risen, due to an increase in fish stocks following the end of El Niño in May this year.
As a result, Peruvian fish meal production for 2016 is forecast up 7% year on year at 900,000 tonnes. The increase in supplies has added downward pressure to global prices. Furthermore, Peruvian fish meal exporters have also cut export prices in a bid to stimulate demand.