McDonald's Japan sees wider losses this year, plans restructuring

Thu Apr 16, 2015 4:28am EDT
 
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By Chris Gallagher and Ritsuko Shimizu

TOKYO (Reuters) - The Japanese unit of McDonald's Corp (MCD.N: Quote) forecast deeper losses this year and said it would renovate 2,000 stores while closing underperforming outlets, as it struggles to bring back customers after a series of food safety scandals.

The company's woes have also been exacerbated by a shortage of french fries in 2014 due to a U.S. ports dispute, while competition from rivals has only intensified with convenience stores in particular offering broader ranges of ready-made meals and low-priced coffee.

McDonald's Holdings Co (Japan) Ltd (2702.T: Quote) said it expects an operating loss of 25 billion yen ($210 million) for the year to end December, more than three times the loss it made last year.

Revenue is expected to slide 10 percent to 200 billion yen, its seventh straight year of decline.

It said it was aiming for a return to profit in 2016, helped by a plan to close 131 outlets this year that do not show long-term growth prospects. The company, which has about 3,100 stores currently, will renovate about 2,000 over the next four years.

In addition, it aims to shed about 100 headquarter jobs through early retirement and will also seek about 12 billion yen in cost cuts by reducing materials, distribution and overhead costs.

McDonald's Japan was hit last year after a major Chinese supplier of chicken was found to have been in breach of food safety standards. It ran into further problems in January when some customers found foreign objects, including a tooth, in their food.

Same-store sales slid a record 38.6 percent in January compared with the same month last year, and dropped about 29 percent in February and March.   Continued...

 
Visitors are seen inside a McDonald's store in Tokyo January 7, 2015.  REUTERS/Issei Kato