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Tuesday, September 16, 2014
McDonald’s August sales slump amid Husi Food scandal
McDonald’s reported a decline in sales both globally and in its Asia/Pacific, Middle East and Africa (APMEA) region, citing a food safety scandal when one of its suppliers repackaged expired poultry and beef and sold it with false expiration dates printed. The global quick service restaurant company announced its August financial results on September 9.
McDonald’s saw its global sales decrease 3.7 percent in August. Sales in the APMEA region dropped 14.5 percent. Don Thompson, president and CEO of McDonald’s attributes much of that drop to a decline in consumer confidence after one of its suppliers, Husi Food Co., sold the expired meat products to McDonald’s for use in its restaurants in China and Japan. McDonald’s, at the time the purchases were made, was unaware of what the Husi employees had done.
“In August, APMEA's comparable sales decreased 14.5 percent, largely due to the recent supplier issue in China, which has significantly impacted results in China, Japan and certain other markets,” the company stated in a press release. “APMEA is in the process of undertaking recovery strategies in order to restore customers' trust and confidence while continuing to pursue value, convenience and menu initiatives that differentiate the McDonald's experience.”
McDonald’s estimated that the Husi Food scandal will negatively impact its third-quarter results by about $0.15 - $0.20 per share in comparison to prior year results. Those results will be released in October.
Husi Food’s parent company, OSI Group, has apologized for the scandal. OSI Group has since closed the plant in question, withdrawn all Husi products from the marketplace and restructured operations in China.