July 30, 2014 3:35 am JST

McDonald's Japan sales down 15-20% after food scandal

TOKYO -- McDonald's Holdings Japan reported Tuesday that sales have fallen 15-20% below projections since an expired meat scandal broke out at a Chinese supplier earlier this month, an added blow to a fast-food giant already hurt by intense competition.        

     Chief Executive Officer Sarah Casanova apologized to customers in a news conference where the company's first-half financial results were released. Citing uncertainty, the company also scrapped its fiscal 2014 forecast.

     The use of expired meat at Shanghai Husi Food, which produced Chicken McNuggets, was reported July 20. McDonald's Japan halted sales of the supplier's chicken nuggets July 21 and switched out all Chinese-made chicken products for ones made in Thailand on Friday.

     Many consumers are still anxious, however. "My children will be sad, but we won't be going to McDonald's for a while," a 44-year-old mother in Tokyo said.

     To address these concerns, the company will take steps to ensure the safety of its products. Quality control experts will in August inspect the Chinese producer of apple pies and other dessert items, as well as the two Thai companies that make chicken products.

     McDonald's Japan or an importer will continue performing monthly inspections of these facilities to ensure that they are using appropriate production techniques and protocols.

     All shipments from China and Thailand will be screened for bacteria upon arriving in Japan as well. Previously, there was no regular inspection schedule for dessert items, and chicken products were examined once every three months.

     The company also posted the final processing locations for the ingredients of each menu item on its website Tuesday.

     McDonald's Japan had faced trouble even before the Shanghai Husi incident. In the last 12 months, January was the only one with year-on-year growth in sales. Customer traffic has decreased for 14 months straight in the face of competition from other restaurants and convenience stores.

     The company had introduced new products aimed at families, such as avocado burgers, and some were favorably received. With the fallout from the scandal, though, the chain is back in a pickle. "We don't know how long this will last," Executive Officer Akira Imamura said.