Struggling restaurant chain McDonald’s Holdings Co. (Japan) on Friday cut its full-year earnings forecast by about 50 percent due to weak sales during the first half of the year.
McDonald’s slashed its full-year group net profit projection to 2.09 billion yen from 3.96 billion yen on revenue of 303.36 billion yen, down from 328.27 billion yen in the initial forecast.
According to January-June results announced the same day, McDonald’s group net profit came to 133 million yen on sales of 146.56 billion yen.
McDonald’s, which changed to a holding company in July 2002, did not give comparable figures for last year.
However, the company’s plight was underscored by its monthly same-store sales, which have been hovering below year-before levels for nearly two years.
The same-store sales, or turnover of those opened at least a year, was down 5.6 percent from the same period last year.
The country’s largest restaurant chain, with 3,800 outlets, has been struggling to turn around after posting a net loss in 2002 for the first time in 29 years.
“We at McDonald’s Japan are not satisfied with these results,” chief executive Pat Donahue said. “While the current environment in which we operate remains extremely challenging, the fact is that the initiatives we put in place earlier this year have not performed up to our expectations.”
Donahue took over the top post in May, replacing charismatic founder Den Fujita, who retired in March following news of the firm’s first-ever net loss.
Stressing the chain’s shift of business focus from “short-term tactics to long-term strategies,” Donahue said the burger chain is working to develop a menu and services that are more relevant to customers.
In April, the chain launched its New Tastes Menu, featuring healthier meals aimed at young female consumers.
In July, McDonald’s raised the price of its regular hamburger to 80 yen from 59 yen, ending a yearlong discount promotion, and began a Smart Saving system offering particular combinations of hamburgers, French fries and drinks at a discount.
In late July, the chain also kicked off a one-month quick-service campaign during lunch hours at outlets nationwide. In the campaign, designed to ease customers’ frustration during the lunch jam, clerks flip an hourglass upon taking an order and give customers a coupon for free fries or Coca Cola if their order is not ready within 60 seconds.
Donahue said he expects to see the dividends of these strategies soon. He said he expects the decline in same-store sales to narrow to 1.5 percent during the fiscal second half of this year.
But prospects for the Golden Arches remain murky. Monthly same-store sales for July, also announced Friday, slipped 4.4 percent, extending the negative growth streak to 22 consecutive months.