McDonald's Corp. is gearing up to sell chicken and beef in a few Chinese cities again this week after its supplier was accused of selling old meat, but the company said Monday that the food scare is hurting its results across Asia.
The fast-food giant is trying to boost sales and repair its reputation as one of its main meat suppliers, Shanghai Husi, a division of OSI Group, is investigated by Chinese officials who suspect it distributed expired meat and doctored production dates.
Customers, however, aren't buying.
In a regulatory filing Monday, McDonald's said its "businesses in China, Japan and certain other markets are experiencing a significant negative impact to results." The company has about 2,000 locations in China and 3,100 in Japan.
Although the Oak Brook, Ill., company has not determined how the meat scare will impact 2014 earnings, it said the affected markets account for about 10% of its total revenue, putting the company's global sales forecast for 2014 "at risk."
McDonald's and Yum Brands Inc., which owns KFC and Pizza Hut, have been embroiled in China's latest food scare since last month, forcing the chains to stop selling a slew of menu items and lose customers.
"I went to a McDonald's last weekend, and they were only offering Filet-o-Fish sandwiches, and most vegetable and salad dishes were gone," said Penny Jing, a 24-year-old student from Hong Kong. Jing also said the restaurant was not as busy as usual.
The company promised customers Monday that its full menu will return gradually. The chain is a longtime partner with OSI and said it would continue to work with the company's other Chinese plants.
Yum, on the other hand, cut ties with OSI. The chain has about 6,400 locations in China and said last week that the scandal has “shaken consumer confidence” and had a “significant, negative impact” on sales at its KFC and Pizza Hut chains in China over the last 10 days.
It’s too early to tell how long it will take for sales to recover, the company said last week.
OSI pulled all products produced at Shanghai Husi and replaced its Chinese management team. The Aurora, Ill., company said Monday that six Husi executives were arrested as part of the ongoing investigation.
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