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McDonald’s sales plummet

 

McDonald'sMcDonald’s says global sales fell 3.7 per cent in August, driven lower as the hamburger chain’s Asia-Pacific region sales dropped 14.5 per cent due to a food safety scandal in China.

McDonald’s Corp said earlier this month that it will monitor its suppliers in China more closely after a food safety scandal in the country hurt its sales and reputation.

The announcement came after a TV report in July showed workers at McDonald’s supplier Shanghai Husi Food Co repacking expired meat.

McDonald’s is not the only fast food company to be hurt by food safety concerns in China.

Yum Brands Inc, whose brands include KFC and Pizza Hut, has also stopped using meat from the Shanghai plant and said that its restaurants cut all ties with OSI in China, the US and Australia.

McDonald’s anticipates the China scandal will hurt its third-quarter results by about 15 cents to 20 cents per share compared with its year-ago results.

The Illinois-based company said it will update its 2014 financial guidance when it reports its third quarter results in October.

In the US, sales at established locations in operation at least 13 months declined 2.8 per cent in August.

The figure dipped 0.7 per cent in Europe due to weakness in Russia.

McDonald’s said that soft revenue is expected to pressure its US margin performance in the third quarter.

Aside from dealing with the China food safety scandal, McDonald’s faces increasing competition and shifting eating habits.

The chain is trying to adapt on multiple fronts, including a “Build-Your-Own-Burger” test in Southern California and a new Bacon Clubhouse burger positioned as a premium offering at $US5 or $US6.

AP

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