Leading fast food chain McDonald’s has admitted that a scandal involving its supply chain in China has had a “significant negative impact” on its sales.
In July, McDonald’s was forced to take many products off its shelves across China, after police launched an investigation into allegations that expired meat was supplied to its stores.
The move left some stores in northern and central China serving only fish sandwiches, fries and ice cream.
Regulators suspended operations at the US-owned Shanghai Husi Food Co., after a local news investigation claimed it was repackaging stale beef and chicken.
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These products were apparently sold to brands also including KFC, Pizza Hut, Burger King and Starbucks. Some stores in Japan were also affected.
These regions are a big market for McDonald’s – contributing around 10% of its annual revenues. Now, in a new statement, the company said it might fail to meet its sales forecast for this year as a result.
“While this matter will negatively impact results in the near term, we cannot reasonably estimate the impact on full year 2014 earnings at this time,” McDonald’s said.
Local police say six senior employees of Shanghai Husi Food Co. are currently being detained as their investigation continues.
The safety of the food supply chain is frequently a front-page issue in China. In 2012, sales at Yum Brands’ Pizza Hut and KFC dipped after a report revealed that two of its suppliers were drugging chickens with excessive levels of antibiotics.
In January, the retailer Walmart also recalled meat sold in some of its Chinese stores after tests revealed some products contained fox DNA.
A new bill that would strengthen China’s food safety laws was tabled for its first reading in June. It would allow the authorities to fine suppliers to up to 30 times the value of the offending products.
Photo: Alex Ling via Free Images
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