* McDonald's Japan has changed suppliers after scandal in
* Getting chicken from Thailand, may consider meat from
* Company already struggling due to convenience story
(Adds CEO comment, details on response to Husi meat scandal)
TOKYO, July 29 McDonald's Holdings Co (Japan)
withdrew its earnings guidance for the year on Tuesday
and said it was working on a contingency plan after a major meat
supplier in China was shut down by regulators for food safety
It also said it would consider seeking damages from the
The Japanese unit of the world's biggest hamburger chain
immediately switched to alternative chicken supplies both in
China and Thailand after the scandal broke last week.
But days later it narrowed its sourcing to two existing
suppliers in Thailand due to Japanese consumers' widespread
distrust of food originating in China.
McDonald's Japan had forecast an operating profit of 11.7
billion yen ($115 million) for the full year to Dec. 31, up 1.5
percent from 2013, and net profit of 6 billion, up 17 percent.
For the six months to June 30 it reported a 50 percent
plunge in operating profit to 3.5 billion yen and a 59 percent
drop in net profit to 1.85 billion yen.
It also said on Tuesday it was considering sourcing some
meat from Brazil. Chief Executive Sarah Casanova said that while
its Thai suppliers had enough capacity to handle Japanese
demand, the company needed a contingency plan.
Casanova said McDonald's Japan would also begin providing
more information on the country of origin and processing for its
ingredients and step up inspections of suppliers.
The Shanghai Husi meat scandal has flared up just as
McDonald's Japan is scrambling to reverse two straight years of
falling sales, including by offering more chicken-based items to
expand its menu.
The company has said previously that the sourcing switch
could cause many of its 3,100-plus stores to run out of chicken
In withdrawing its full-year profit guidance, McDonald's
Japan said it was unclear how much it would suffer.
"We are not able today to assess the extent of the impact on
our business," McDonald's Holdings, held 49.9 percent by
McDonald's Corp, said in a statement.
An executive said sales were down 15 percent to 20 percent
on a daily basis compared with original projections.
Last week, McDonald's Corp reported a bigger-than-expected
fall in quarterly profit as established restaurants in the
United States and Europe also suffered sales
McDonald's Japan has been under attack from the country's
ubiquitous convenience stores, which have attracted consumers
with cheap, freshly brewed coffee, seating areas and other novel
products and services.
($1 = 101.9300 Japanese Yen)
(Reporting by Chang-Ran Kim; Editing by Chris Gallagher and