TOKYO--The operator of the McDonald's chain in Japan said
Thursday it expects to post deep losses in the current year and
that it would be closing 131 of its stores.
Unveiling plans to turn around its struggling business,
McDonald's Holdings Co. (Japan) Ltd. said it expects to rack up a
Yen38 billion ($318.8 million) net loss in 2015. It said it would
revamp about 2,000 of its restaurants over a four-year period.
The Japanese affiliate of the world's biggest fast-food chain
has been grappling with a series of food contamination cases,
including a human tooth found inside a pack of french fries in
Osaka, and an incident in Fukushima prefecture where a child was
hurt by a piece of hard plastic in a chocolate sundae. It was also
hit hard by a Chinese media report last year that accused supplier
Shanghai Husi Food Co. of selling expired meat to restaurant
companies.
The projected loss is worse than the Yen21.84 billion loss the
company posted for 2014, its first annual loss in 11 years.
McDonald's Japan, which is 50%-owned by McDonald's Corp. of the
U.S., also forecasts that systemwide sales in 2015 will be down
14.4%.
Saying that the company accepts responsibility for recent
results and the disappointing forecast, McDonald's Japan said
President and Chief Executive Sarah Casanova would take a 20% pay
cut for six months. It also said it would cut by 10% the
remuneration for board members who are still with the company and
were on the board in 2014 for six months.
The company also said it is seeking early retirement from about
100 workers at its headquarters.
McDonald's Japan said it expects to return to profitability for
2016.
A set of "customer-focused" initiatives will include a new
loyalty program with coupons and a mobile app to gather real-time
customer feedback.
McDonald's Corp. in the U.S. is also struggling through a rough
patch of slumping sales, and pessimism has grown among some
McDonald's franchisees in the U.S. about the fast-food giant's
efforts to reverse lagging sales and rebuild its damaged image,
according to the latest survey of franchisees by Janney Capital
Markets analyst Mark Kalinowski.
Respondents to the quarterly survey, which covers about 25
franchisees who own a total of about 215 U.S. McDonald's
restaurants, rated the outlook for the business over the next six
months as between poor and fair.
A spokeswoman for the Oak Brook, Ill., company said about 3,100
franchisees run McDonald's restaurants across the U.S. "We value
the feedback from our franchisees and have a solid working
relationship with them," she said. "Less than 1% of them were
surveyed for this report."
Several respondents complained about the costs involved in Chief
Executive Steve Easterbrook's push to revamp the chain--including a
plan to raise wages at company-operated stores, a move that will
pressure franchisees to increase pay as well.
Megumi Fujikawa and Annie Gasparro contributed to this
article.
Write to Shawn Schroter at Shawn.Schroter@wsj.com
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