McDonald’s Japan Projects Profit In 2016 After Three Years Of Loss

For the first time in three years, McDonald's Corp.'s Japan business has projected that it will return to full year profit with a group net profit of 1 billion Yen ending December this year (2016).

2015 saw a net loss of 34.7 billion Yen, in the year that ended in December 2015. It crossed the figure for the loss it incurred a year before; of 21.8 billion Yen. The Tokyo- based company forecast a full year loss of 38 billion Yen last April.

McDonald's Japan intends to improve sales figures by revamping around 500 to 600 outlets.

The staggering loss initiated at McDonald's Japan stores in 2014 as sales went down 15 percent. The Japanese division has now reported a net loss two years in a row. The firm's earnings plummeted as many outlets were closed. Operating loss blew up from 2014's 6.714 billion to 2015's 25.233 billion. Recurring loss shot up from 7.974 billion Yen to 27.691 billion Yen.

McDonald's sales at all the stores, including franchise outlets, fell 15.6 percent, landing at 376.5 billion Yen.

Both net result and sales were a record worst since 2001, the company's stock listing year.

The downfall was not helped by the events in late 2014, when video footage was revealed that seemed to depict workers at a Chinese supplier of chicken nuggets mishandling food and using out-of-date meat. The Japanese company proceeded to switch to a Thai company - but that didn't do much good. In early 2015, foreign objects were reported found in nuggets - including what seemed like pieces of vinyl.

To regain some of its standing, McDonald's Japan closed over 150 outlets. They also opened only 16 new restaurants last year according to their annual report. McDonald's also refurbished and updated many of its 2,956 stores.

In an attempt to boost sales, the fast food chain introduced chocolate French fries, "McChoco Potato." The technique seemed to work as the Tokyo-based company saw its first increase in customers since April 2013. Visitors to the store went up 17 percent in January and sales improved by 35 percent.

President Sarah Casanova was reported to have expressed hope in a post-earnings press conference in Tokyo on Tuesday (9 Feb). "We've seen a considerable reversal of momentum in the later half of 2015 and the momentum continues to grow," she said.

Casanova added that it was premature to comment on news of a plan by U.S. chain McDonald's Corp. to sell its stake in the Japanese unit.

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Japan, 2016
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