McDonald’s Admits China Meat Scandal Affects Sales
Patricia Villaceran | | Aug 05, 2014 02:57 PM EDT |
(Photo : REUTERS/Yuya Shino) Customers are seen through the windows of a McDonald's store
McDonald's revealed Monday that the Chinese meat scandal has greatly affected the company's sales.
The world's largest fast-food chain also complained that the meat supplier controversy has put its global profit expectations at risk.
McDonald's said the scandal's negative impact has affected Asian markets like China and Japan, which accounted for more than 10 percent of the company's revenue.
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The Oak Brooke, an Illinois-based company, said the company's international profit could remain steady for the entire fiscal year.
The meat scandal started when a Chinese TV reported in July that the workers of McDonald's Chinese meat supplier were using deteriorated meat.
Shanghai Husi Food Co., the meat supplier, is an affiliate company of OSI, a company located in Aurora, Ill. OSI is also in a long-term partnership with McDonald's and is also reported to be the international supplier of the hamburger chain. It also has other clients than McDonald's.
Recent investigations on Husi revealed that some of McDonald's branches were left without chicken or beef. Husi also supplied for McDonald's restaurants in Japan.
So far, McDonald's is sticking with OSI with its goal to fix the remaining Husi plants in China.
Yum Brands acknowledged the fact that the bad publicity has degraded their credibility. Yum Brands' KFC and Pizza Hut franchises in China were also affected.
Yum Brands, located in Louisville, Ky., said that it used very few products from Husi. The company also said that it has already severed ties with OSI after the scandal. However, Yum Brands is still working on recovering their reputation from the chicken scandal back in 2012.
Meanwhile, OSI issued a statement Monday saying that six of Husi's employees who were involved in the scandal have been detained by the Public Security Bureau of China.
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