not lovin it

McDonald’s is losing a lot of customers in China over the expired meat scandal

August 9, 2014
August 9, 2014

That symbol of Americana, McDonald’s, has suffered a hit around the world. Global comparable monthly sales in July fell by 2.5%, the hamburger chain’s worst performance in a decade. The drop was led by Asia, Middle East, and Africa, where sales fell by a whopping 7.3%.

The reason? The expired meat scandal in China, where health authorities suspended Shanghai Husi Food for selling beef and chicken as much as one year past their expiry dates to McDonald’s and to Yum Brands, which owns KFC and Pizza Hut. An investigative report showed Shanghai Husi workers “picking up food from the floor and throwing it into processing machines and “discarded” McNuggets were were reprocessed until they passed inspection. The US-based OSI Group owns Shanghai Husi and is McDonald’s largest protein supplier. “Results in China, Japan and certain other markets experienced a significant negative impact,”McDonald’s said Friday.  “The affected markets represent approximately 10% of global systemwide sales.”

But the company also has a problem in the US—where sales fell 3.2% as consumers turn away from fast food and the company faces bad publicity over the low wages of many of its workers. The National Labor Relations Board has ruled that the company is liable for conduct at its franchise stores as well—which is how the vast majority of its 14,000 stores are operated.

McDonald’s hopes to have chicken and beef back in all its Chinese stores very soon, but undoing the lasting damage to its image may take a while longer. The chain said the Chinese expired meat scandal put its sales forecasts for the whole company this year at risk. “Going forward, McDonald’s is undertaking recovery strategies to restore customers’ trust and confidence,” it said. Until then, there’s always the filet-o-fish.

 

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