THE ASAHI SHIMBUN

McDonald’s Holdings Co. (Japan) is forecasting an operating loss of 9.4 billion yen ($86.78 million) for fiscal 2014, its first operating deficit in 41 years, after a food safety scandal in China crippled sales here.
 
The company, which posted an operating profit of 11.5 billion yen the previous year, released a revised forecast on Oct. 7 that showed sales are expected to total 221 billion yen for its business year ending Dec. 31. That is down from sales of 260.4 billion yen the previous year and a reduction from its earlier estimate of 250 billion yen.
 
The company also projected its first net loss in 11 years--17 billion yen--compared with a net profit of 5.1 billion yen the year earlier.
 
“We disappointed our customers,” Sarah Casanova, president of McDonald’s Japan, said at a news conference in Tokyo on Oct. 7.
 
The company said the downward revision was mainly the result of plummeting sales after it was found that a supplier in China was delivering chicken meat past the consumption date to the company.
 
McDonald’s Japan has since been using chicken meat from Thailand for its popular Chicken McNuggets and other products.
 
The company’s monthly same-store sales have continued to decline by around 20 percent year on year since July, when the scandal erupted. The company forecasts sales to drop by 15 percent to 20 percent in October through December from a year earlier.
 
The reduction in sales from the scandal is expected to push down profits by 11.6 billion yen.
 
McDonald’s Japan will spend 10.4 billion yen on countermeasures against the health scare, while the asset values of McDonald’s outlets will decrease by 6.2 billion yen, further eating away at the company’s profits.