McDonald’s is seeing a drop in sales after suffering a marketing blow from a meat scandal in China, as well as persistent weakness in the U.S. market. Global sales have fallen 2.5 percent in July, the AP reported.
The food scandal that occurred last month involved expired meat being repackaged at a Chinese food supplier that sends products to McDonald’s, Starbucks, Burger King, and other international chains. The company in question, OSI Group, reportedly knew the meat was expired but changed the labels in order to deceive the restaurants it was supplying. McDonald’s restaurants in both China and Japan had to remove various items, such as Chicken McNuggets and Big Macs, from their menus.
“We do feel we were a bit deceived relative to one of these plants,” Don Thompson, CEO of McDonald’s, told USA Today when the scandal occurred.
Other restaurants who had relied on OSI Group for food products quickly cut ties after the incident, such as Yum Brands, the owner of both KFC and Pizza Hut. McDonald’s isn’t the only fast food chain to see a drop in sales: most of these restaurants have been a bit beaten down after the scandal. The AP notes that McDonald’s has been struggling to keep sales up in the U.S. due to “intensifying competition and shifting eating habits.” If McDonald’s global sales for 2014 drops because of this, it will be the first time the company sees a decline in sales since 2002 — and that might be a good thing.
Last week, OSI chairman Sheldon Lavin announced that individual employees were to blame for the expired meat incident, but that the company accepted responsibility. However, Sebastien Breteau, CEO of AsiaInspection, noted that “it seems that it was not an accident but a hidden practice, which is really bad,” he told the AP. “It means that in management, they had not put in place what they had to. It was not properly audited.”
In the U.S., McDonald’s has attempted to ride the wave of healthy eating by adding new items to its menu, that provide a more balanced, nutritious meal for the average American. There’s the “Favorites Under 400” menu, which provides a variety of meals under 400 calories, like the Egg McMuffin or Filet-O-Fish, as well as salads, oatmeal, yogurt parfait, and medium fries. But these are apparently not quite making it the cut, as many health-minded Americans are turning to other healthy food options instead. Chipotle, for example, offers more wholesome ingredients and doesn't have the same "junk food" stigma that McDonald's holds.
It turns out that many Chinese consumers are even more turned off by fast food now than before. “As everybody says, fast food is junk food, unhealthy,” a KFC customer in Beijing told the AP. “I will eat at fast food restaurants even less in the future.”