• Tue
  • Dec 23, 2014
  • Updated: 8:07pm
NewsHong Kong

Meat scandal sees McDonald's sales drop 7.2 per cent in emerging markets

US giant's sales drop 7.2 per cent in emerging markets due to uproar over tainted supply

PUBLISHED : Friday, 08 August, 2014, 9:44pm
UPDATED : Saturday, 09 August, 2014, 2:59am

The rotten meat scandal at a Shanghai factory has hit customer McDonald's bottom line, with sales at the fast-food giant's restaurants in the Asia Pacific, Middle East and Africa dropping 7.2 per cent last month.

The company said in its monthly sales report the steep decline was caused by the impact of food-quality and safety issues at a food supplier in China - without naming the company.

Shanghai Husi Food, whose parent is the US-based OSI Group, was a key supplier to McDonald's and other food companies before the scandal over its repackaging of out-of-date meat products erupted.

McDonald's said its full-year global sales target was now at risk as customers deserted its restaurants in droves. China and Japan accounted for 10 per cent of sales, the company said.

Worldwide sales fell 2.5 per cent last month. Sales in Europe rose 0.5 per cent but US sales fell 3.2 per cent amid fierce competition. Analysts expected a 1.1 per cent fall in total sales, according to Consensus Metrix.

"We intend to strengthen our performance by addressing the current business headwinds with the discipline and conviction that inspire our customers' trust and loyalty," McDonald's chief executive Don Thompson said.

Sales in Africa, Asia and the Middle East had increased 1.1 per cent for the second quarter of this year, prompting bullish assessments by McDonald's executives of its growth prospects in emerging markets such as China.

McDonald's in mainland China only this week resumed full-menu sales, two weeks after it cut ties with Shanghai Husi.

In Hong Kong, the scandal triggered a probe by the Centre for Food Safety into whether McDonald's knowingly sold potentially tainted food to the public over a four-day period during which it denied using food from Shanghai Husi. It later admitted that it had in fact been supplied by Husi.

Outlets pulled menu items that came from Husi plants in Shanghai and Guangzhou.

Additional reporting by Reuters



For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive



This article is now closed to comments

Franchises like McDonalds will always face problems like this because they squeeze suppliers to sell at the lowest prices. It is inevitable that some suppliers will cheat in order to get the contracts. The economic power multinationals wield is ultimately self defeating because their only ruling imperative is the bottom line for shareholders. This is inimical to the democratic values of the free societies in which they were born, yet they could not have thrived without the very freedoms they now endanger. The fault, however, does not lie with these companies, it lies with the misguided, short sighted, dogmatic political and economic policies begun by Margaret Thatcher and Ronald Reagan and continued by successive regimes who naively believed that unfettered capitalism would share wealth and benefit the mass of the people.
Capitalism knows no limit bar profits and has no social conscience. It simply seeks the cheapest cost of production and maximum return. Deregulation since 1980, disguised as "free trade" has turned out to be the biggest threat to the free world because the powerful corporations have subverted the democratic process by investing capital in dictatorships which are inimical to democracy and individual freedom. Corrupt dictatorships have been empowered by capital, technology and know how from the free world.
If the free world is to survive the threat of the new, rising dictatorships, it has to look very hard in the mirror and make some tough choices.
Now a day, Mcdonald has this significant rough time. I think that is punished by herself. Because she major business strategy is taking the most effort to press down the cost. There are three main sectors of her cost, renting expenditure, labor cost and food purchase. Due to Hong Kong has two significant policies to protect our wealth and salary, that are a high price property policy and minimum wage policy. Thereby McDonald HK always press down the price offering to the food suppliers. Even offer a below costing price. Until almost myriad HK food suppliers disconnect with her on commercially. So McDonald only cooperated with mainland food suppliers and keeping force price down. In fact, there is getting what you pay which is the first fundamental principle on business rules. And that customers should not patronize McDonald ever.
Once I thought to be a General Manager of McDonald in this time. And I how to solve this problems? I would find another suppliers immediately. Even those suppliers will offer a exorbitant price and I accepted. Because I know, if I abandon the problematic suppliers immediately and change a qualification supplier. There can rescue the most confident in public. The GoodWill is the most valuable on the company.
Not even a double-digit percentage drop? I am disappointed.
the question is, how long was it going on for before being exposed ?
how many people got the shxts or worse from eating BigMacs
One can only hope that McDonalds corporate has learned a lesson. The same mindset that poisons milk powder for profit or makes fake eggs drives these companies in China. They cannot trust local partners who are used to a system where they do what they can get away with and bribe away what they cannot. Quality is a chimera that will always give way to profit. When will companies realize that their actions in China will have implications for their business elsewhere. Do we think that local companies in China did not buy meat from this supplier or that other suppliers in China do not to the same or worse? Like the automobile companies will learn soon, the pharma companies are now learning and as the power companies learned long ago, China is a snake pit and the deck is firmly stacked against you.
Naturally, people will not trust any chain which feeds them junk food and that too rotten. Who can trust that McDonalds will not be dishonest again for increasing profits?
Only in HK can McDonalds try to lure people with $10 Big Macs and once again start the saga runing the health of customers with untrusted food or poor quality.
John Adams
"Customers enjoy food at McDonald's in Sai Wan Ho. Photo: Edward Wong"
Food or poison ? ! ?


SCMP.com Account