- TOKYO - (Asia Pulse) - McDonald's
Co. (Japan) Ltd. expects pretax profit to fall 32 per cent to 20 billion
yen (US$165.27 million) in the business year through December, down about
7 billion yen from an earlier estimate, the company announced Wednesday.
- The hamburger chain operator cited an aversion to beef
on the part of many consumers due to mad cow disease fears and an increase
in costs associated with advertising the safety of its beef as reasons
for the downturn.
- Although the company has been seen as a winner despite
the deflationary environment prevalent in Japan, with promotions such as
half-price hamburgers on weekdays, its earnings are being hurt by the mad
cow disease scare.
- Same-store sales fell 17 per cent in October from a year
earlier, while the number of customers sank 14 per cent, both record monthly
declines. Sales at all outlets, including new ones, also slid 12 per cent.
- Sales for the full fiscal year are estimated at 358.7
billion yen, a slight increase from the previous year but 20 billion yen
below earlier projections. The term is likely to see sales growth weaken
for the first time since fiscal 1994.
- McDonald's has switched to promoting non-beef products
to attract customers, but a company executive says sales have been slow
to recover despite government assurances that beef on the market is safe.
- The company has spent some 500 million yen on television
commercials and posters stressing the safety of its beef.
- Net profit for the business year is expected to sink
36 per cent to 10.7 billion yen, down 4 billion yen from an earlier estimate.
- Yoshinoya D Co. (TSE:9861), a beef-bowl restaurant chain,
is also seeing earnings hurt by fears of mad cow disease. If demand for
beef remains weak, many other restaurant operators are also likely to see
their earnings decline.