McDonald’s Corporation (NYSE:MCD) chain operator based at Japan expressed on Thursday that the company is expecting considerable losses in FY 2015-16, and it has unveiled plans of closing approximately 131 stores in Japan.
The company has plans to turn around a struggling business endeavour, with expectations to rack up $318.8 million of net losses in the current year. It expects to revamp 2000 restaurants over a period of 4 years.
The affiliate in Japan is facing a plethora of grappling cases pertaining to food contamination; one of these being a human tooth in a packet of MCD French fries in a store in Osaka. In Fukushima, a child eating a chocolate sundae, was hurt by some pieces of hard plastic. Even the media houses reported that Shanghai Husi Food Co., the supplier of meat to MCD sold expired meat at some point of time.
Cost Cutting Steps
MCD-Japan has a projected loss which is the first of its kind over a span of the past 11 years. In Japan, MCD owns merely 50% of stores. It has been projected that in 2015, sales would be below the average yearly sales by 14.4%.
CEO and President of McDonald’s Corporation (NYSE:MCD) Japan, Sarah Casanova accepted responsibility for disappointing forecast. 20% cut in pay packages looks imminent for the next half a year. Members of the board (for at least 6 months) will witness a probable 10% cut in remuneration. 100 of its workers at MCD Japan headquarters are in line for seeking early retirement.
With cost cutting methods in place, the company expects to be profitable 2016 onwards. New loyalty programs, app based offers, coupons for availing discounts and such other methodologies shall seek for real time feedback, thereby luring customers.
Sales are lagging and the fast good giant is putting in efforts to rebuild the tarnished image and return to profitability.