Business

McDonalds says China food scandal is hurting sales

  • 4 August 2014
  • From the section Business
Chicken nuggets and Spicy McWings

The fast-food chain McDonalds has said a food scare in China and Japan is having a "significant negative impact" on sales in the region.

In a statement, the company said it might not meet its sales forecast for this year as a result of the China supplier issue.

The affected markets account for 10% of revenues, the company said.

Last month McDonalds suspended sales of its nuggets in Hong Kong amid concerns about an American owned meat supplier.

Its supplies came from Shanghai Husi Food, whose operations have been suspended by regulators after local media reports claimed it re-processed out-of-date meat. Shanghai Husi Food is a subsidiary of the US meat processor, OSI - one of America's largest privately owned companies.

'Risks'

McDonalds said at the time nearly 500 stores in Japan had removed chicken nuggets from their menus, adding that sales were expected to resume after it switches to other suppliers in China and Thailand.

Sales of its Big Macs and Spicy McWings were also halted in some cities.

McDonalds said it could not currently estimate the impact on earnings for the full year, but added that it was "undertaking recovery strategies to restore the trust and confidence of our customers".

Analyst Mark Kalinowski from Janney Capital Markets said: "Risks have ticked up in the near-term regarding McDonalds business in China and Japan."

He estimates that same-store sales in the region will fall 5% in the three months to September.

Other fast food chains such as the KFC and Pizza Hut owner Yum Brands have also said their business has been affected as a result of the scare.

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