September 9, 2014 / 9:07 AM / in 5 years

McDonald's Japan says August sales fall record 25 percent on food safety scare

Passersby walk past a McDonald's store in Tokyo July 31, 2014. REUTERS/Issei Kato

TOKYO (Reuters) - McDonald’s Holdings Co (Japan) (2702.T) said sales fell by a quarter in August, the steepest year-on-year drop since the company became public in 2001, after a food safety scare kept customers away.

McDonald’s Corp (MCD.N) holds a 49.9 percent stake in Japan’s largest restaurant chain. In July, a Chinese TV report alleged that a supplier to fast food chains including McDonald’s and rival Yum Brands Inc (YUM.N) had improperly handled meat and used expired food.

In a statement on Tuesday, McDonald’s Japan said sales at stores open at least 13 months dropped 25.1 percent in August, while the number of customers fell 16.9 percent, mainly due to concerns about food safety.

“At the moment, we don’t know how long the impact (of the food scare) will last,” a McDonald’s Japan spokeswoman added.

Even before the scare, sales at McDonald’s Japan were falling this year due to rising competition from convenience stores: August was the seventh straight month of year-on-year sales decline.

After the safety scare, McDonald’s Japan withdrew its profit forecasts for the year and said at the time that its sales were down 15 to 20 percent on a daily basis compared with original projections.

Before the announcement, shares in McDonald’s Japan closed down 1.4 percent at 2,610 yen ($24.6), underperforming the broader Tokyo market, which ended flat.

Reporting by Chang-Ran Kim; Editing by Miral Fahmy

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