McDonald's Japan posts first operating loss since 2001 listing

[TOKYO] The Japanese unit of McDonald's Corp posted its first annual operating loss since going public in 2001 with sales battered by a food safety scandal and a shortage of french fries.

McDonald's Holdings Co (Japan), which operates the fast food chain's second-largest restaurant network in the world, did not give an earnings forecast for the current business year but said it hoped to issue one in the first quarter.

In a country where consumers are highly attuned to food quality issues, analysts have said they do not expect a quick turnaround for the company which operates the fast food chain's second-largest restaurant network in the world.

The unit, which is 49.9 per cent owned by McDonald's Corp , booked an operating loss of 6.7 billion yen (US$57 million) in 2014 on a 14 percent decline in revenue.

That compares with an operating profit of 11.5 billion yen in 2013.

The problems are an added distraction for McDonald's Corp, the world's largest restaurant chain by sales, which last month replaced its CEO with Chief Brand Officer Steve Easterbrook following one of its worst financial years in decades.

Last year, the Japan unit was hit after a major Chinese supplier of chicken was found to have been in breach of food safety standards. It was then forced to temporarily ration fries due to labour disputes at US West Coast ports and take the costly step of shipping some by air.

Food safety issues arose again last month with the news that customers had found foreign objects, including a tooth, in McDonald's Japan food. Same-store sales for January slid 39 per cent, its seventh straight month of double-digit declines.

REUTERS