Horror quarter for McDonald’s Japan

McDonald’s Japan had already warned investors it would be a nightmare year.

Earlier this month it announced the closure of 131 stores, a menu revamp and refurbishment of 500 stores in a bid to stem a projected US$319 million loss.

This week, McDonald’s Holdings Company (Japan) released its first quarter trading results: same-store sales plunged 32.3 per cent due largely to a 24.3 per cent drop in customers and total sales fell 39.9 billion yen (US$332 million) to 83 billion ($691 million).

Sales were hampered by ongoing food safety issues relating to suppliers, and even a widely reported shortage of fries, which led to unprecedented rationing to customers.

The result was an ordinary trading loss of 11.1 billion yen ($92.4 million) which after the first round of one-off restructuring costs grew to a total 14.5 billion ($121 million) loss for the three months to March 31.

But the fast food company said same store sales are trending upwards – with expectation they will turn positive in the third quarter. Provisional figures for April show a drop of 21.5 per cent, nearly a third less than the first quarter.

For now, the company says its focus is on executing the Business Revitalization plan in order to accelerate the business recovery, lay the foundations for future growth, and achieve mid- and long-term goals.

“Going forward, regaining customer confidence will remain our number one priority. In addition, we aim to accelerate the pace of business recovery and lay the foundations for future growth through the flawless execution of our Four-pillar Business Revitalization Plan: “Customer Focused Initiatives”, “Accelerate Restaurant Revitalization”, “Localize Our Business Structure”, and “Improve Cost and Resource Efficiency”,” McDonald’s Japan said in its earnings statement.

“Through these structural changes along with customer and community focused activities, we will strive to achieve our vision of becoming a Modern Burger Restaurant that Connects with Customers.”