Food Scandals in China, Japan Hurt McDonald’s Global Sales
Raymond Legaspi | | Feb 09, 2015 03:08 PM EST |
(Photo : REUTERS/Toru Hanai) A man uses a mobile phone in front of a McDonald's restaurant in Tokyo, February 5, 2015.
Scandals over 'tainted' McDonald's food served in Japan and China sent the fast-food giant's worldwide sales tumbling 1.8 percent in the first month of the year.
Sales of the global burger chain did grow in the U.S. and Europe by 0.4 to 0.5 percent in January but that did not make up for the sharp 12.6 percent slump in sales in Asia.
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McDonald's operates in about 100 nations with more than 36,000 stores.
In China, the burger seller is still reeling from a scandal in summer last year over expired meat that was repackaged. An undercover television report traced to the meat to a major supplier of the food chain.
The supplier and state food regulators did not confirm the incident but the supplier froze operations. A supply shortage forced many McDonald's stores in China to take out chicken nuggets and burgers out its menu.
In Japan, public perception of McDonald's took a hit as well after plastic pieces, a human tooth and other things were mixed in its served food.
In a January briefing, the chain said it expected to weather the fallout from the food scandals in China in three to six months. The public backlash in Japan over scandals is also expected to cost local McDonald's stores in the short term.
In Europe, sales growth in Germany and the U.K. helped make up for softer numbers in Russia and France.
In the U.S., tough competition from smaller rivals like Chipotle and convenience stores chipped away growth in the sale of the chain's popular breakfast items.
Chipotle is styling itself as a chain with higher food quality.
Last month, McDonald's embarked on an ambitious plan to get customers back in stores starting with a replacement of its CEO. The company's chief brand officer, Steve Easterbrook, has replaced former chief exec Don Thompson.
The change in leadership was announced after the hamburger chain announced another drop in its October to December sales and earnings.
The restaurant plans to forego opening new restaurants in some locations. It also seeks to present a simpler food menu, with ways to let customers tweak their food. McDonald's plans to present customers with several ways to order, such as through a mobile phone or a self-order kiosk.
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