McDonald's Japan adding stores as turnaround gains momentum

[TOKYO] McDonald's Japan is adding to its restaurant count in the second half of the year, underscoring a turnaround that has seen same-store sales climb for 21 straight months.

McDonald's Japan plans to open more restaurants than it will close in the second half, said chief executive officer Sarah Casanova, adding that she expects the trend in new stores to continue next year.

That comes after the fast-food chain shuttered restaurants for years as it faced food-contamination scandals that sent sales plummeting.

McDonald's Japan shares jumped 1.6 per cent Thursday to close at 4,960 yen. The stock has gained 62 per cent this year, outstripping the 30 per cent gain for McDonald's.

"We're seeing balanced growth," Ms Casanova said in an interview at the company's Tokyo headquarters Wednesday.

"There's more work to do and there's so much more potential in Japan."

The purveyor of chocolate french fries and Hawaiian Loco Moco burgers is positioning itself for growth after rebounding from a series of food scandals in 2014 and 2015 - a turnaround that earlier this year prompted its US parent to reverse a decision to sell a stake in the company.

McDonald's Japan raised its full-year profit outlook in August as it invests in remodeling restaurants and expansion.

The company said it will open 10 new stores in Japan in the final half of the year, while closing seven.

The last time it had a net addition for a six-month period was in 2012, according to company data.

The count for all of 2017 will show a net reduction of 10 restaurants, McDonald's Japan said, leaving it with about 2,900 stores.

Still, that's a sharp slowdown in closings from recent years. The company shut more than 100 stores in 2015 as it dealt with food-contamination problems.

Same-store sales climbed 15 per cent in August from a year earlier, McDonald's Japan reported on Wednesday, citing successful launches of regional items including its Tokyo roast beef burger and Osaka beef cutlet sandwich.

Ms Casanova has led the turnaround, closing underperforming stores and remodeling others to be more modern.

The company's plans include adding electronic payments at every store and expanding delivery service through UberEats.

Earlier this year, Oak Brook, Illinois-based McDonald's, which has a 49.9 per cent stake in the Japanese company, reversed its previous decision to explore options to sell its holding, saying it had confidence in the company's strategy.

BLOOMBERG