McDonald's faces woes in US, abroad

Updated: 2014-09-11 13:14

By JACK FREIFELDER in New York(China Daily USA)

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McDonald's Corp announced earlier this week that it experienced across-the-board declines in its global sales for August, partly due to meat supplier scandal in China.

A Tuesday press release from McDonald's shows that global comparable sales declined 3.7 percent last month, but the most significant dip, 14.5 percent year-over-year, occurred in the Asia/Pacific, Middle East and Africa (APMEA) region. Sales in the US and Europe saw downturns of 2.8 percent and 0.7 percent, respectively.

It said a portion of the downtick in sales was due to recent meat supplier issues in China, which have "significantly impacted" results in China, Japan and other markets.

In July, two staples in the fast food industry, McDonald's and Yum Brands Inc, cut ties with Shanghai Husi Food Co Ltd, a unit of US-based food supplier OSI Group, over the sale of expired meat to some of their restaurants in China. A number of other companies have followed suit.

Darren Tristano, executive vice-president of Technomic Inc, a Chicago-based research and consulting firm covering the food service industry, told China Daily: "Some of the food safety issues [in China] are very likely to have a negative, shortterm impact, but brands do have these issues - especially when operating away from their corporate headquarters."

Tristano said "after a long run of very strong sales and outperforming the industry", McDonald's has seen some struggles of late - both domestically and internationally.

"McDonald's has run into some headwinds," Tristano said. "It's been a struggle for McDonald's in the US."

McDonald's said it plans to increase scrutiny of its suppliers in the Asia-Pacific region in light of the issues it has seen in the Chinese market.

The multinational sees the drops as the beginning of a tough stretch.

"During August, McDonald's global business faced several headwinds that impacted sales performance," DonThompson, McDonald's president and CEO, said in a statement on Tuesday. "We are diligently working to effectively navigate the current market conditions to regain momentum. For the long term, we remain focused on … strategic growth priorities for our customers and business."

Founded in California in 1940, McDonald's has more than 35,000 locations worldwide serving close to 70 million customers in more than 100 countries each day. Its headquarters are located in Oak Brook, Illinois.

A Tuesday research note from Sanford C Bernstein & Co said McDonald's missed estimates for global comparable sales in August "as weak results in the US and APMEA [region] weighed on performance.