McDonald’s Sales Hit By Food Safety Scandal In China

Updated on

McDonald’s Corporation (NYSE:MCD) cautioned that the food safety scandal in China put its global sales performance for the full-year 2014 in jeopardy.

In a regulatory filing, McDonald’s Corporation (NYSE:MCD) stated that its global comparable sales for the full-year is expected to be similar to its year-to-date June performance due to a stagnant IEO category, sustained competitive activity, consumer price sensitivity and cost pressure.

McDonald’s cuts relationship with Chinese meat supplier

McDonald’s Corporation (NYSE:MCD) said, “As a result of the China supplier issue, the company’s global comparable sales forecast for 2014 is now at risk.” The world’s largest restaurant chain operator severed its relationship with its meat supplier, Shanghai Husi Food, the Chinese affiliate of OSI Group LLC. The Chinese meat supplier was accused of selling expired meat.

In a previous statement, McDonald’s Corporation (NYSE:MCD) apologized to consumers, and emphasized that it has zero tolerance for any malpractices and the company abides by all laws and regulations with strict standards for itself and all suppliers. The company said, “There is no compromise to the well-being and food safety standards that Chinese consumers have come to expect from us.”

McDonald’s Corporation (NYSE:MCD) experience a shortage of hamburger and chicken products at its stores in the northern and central part of China after cutting its ties with Shanghai Husi Food early this month.

McDonald’s July sales performance

McDonald’s Corporation (NYSE:MCD) reported that its global comparable sales declined 2.5% in July.

According to the company, its sales in the United States declined 3.2% and Asia-Pacific Middle East and Africa (APMEA) fell 7.3%. Its sales in the European region rose 0.5%.

“As a consequence, results in China, Japan and certain other markets experienced significant negative impact. The affected markets represent approximately 10% of global systemwide sales and negatively impacted the segment’s July comparable sales by over 700 basis points,” according to McDonald’s Corporation (NYSE:MCD).

McDonald’s CEO Don Thompson said that company will “strengthen its performance by addressing current business headwinds with the discipline and conviction that inspire our customers’ trust and loyalty.”

Leave a Comment