The American fast food giant McDonald's (MCD), continues to face sluggish sales in the month of August. With the demand for burgers falling in its domestic market in the U.S. and health scare arising in China, comparable store sales are getting adversely hit. Issues regarding food safety leveled among the Chinese suppliers and growing health consciousness among Americans is having a bearing on the company's revenue. Considering that this is the key revenue driver of the company, is it something the company should be worried about?
Tough times
McDonald's sales tumbled in China, a crucial market for growth, where it has 2000 stores. The company has been charged of using expired meat that it received from one of the Chinese supplier. In July a television station covered a report on McDonald's where they found that Shanghai Husi Food Co., the main meat supplier of McDonald's had supplied expired meat for the patties.
This scandal affected the reputation of McDonald's very badly and after that the outlets in China and Japan faced crisis for chicken and beef for three weeks. Shanghai Husi would supply meat to Yum! Brands (YUM), too, and they faced a similar fate. Since Yum! has a bigger presence in China, it is worse hit. McDonald's is working hard to win back the trust of its customers in China.
The Big Mac maker has 14,200 locations in the U.S. and is facing tough challenges in native stores too. The company is trying to lure customers by offering discounts and revamping outlets, but all ideas seem to be in vain. It was offering Jalapeno burgers for $2 and chicken nuggets for $5. Burger King (BKW) and Taco Bell, the two
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