McDonald’s global sales hit by food supply scandal

August 8, 2014, 1:03 PM UTC
Two Chinese men walk past a billboard ad
Two Chinese men walk past a billboard advertising US fast-food giant McDonald's, in Yichang, central China's Hubei province on July 8, 2010. McDonald's said it was working with Chinese authorities to test its Chicken McNuggets amid reports they contained risky chemical additives, but stressed the food was safe. CHINA OUT AFP PHOTO (Photo credit should read STR/AFP/Getty Images)
Photo by STR AFP—Getty Images

July wasn’t exactly magical for McDonald’s, as the fast-food chain saw global sales plunge, pulled down by weakness in the U.S. and the effects of a food safety scandal in China.

The world’s biggest hamburger chain said global comparable sales, a key measure, decreased 2.5% in July. This is more than double the 1.1% analysts expected sales to drop. Other markets saw sharp declines: McDonald’s reported a 3.2% sales drop in the U.S. and a 7.3% slump in Asia, the Middle East and Africa.

The largest driver of the drop was the recent scandal involving McDonald’s (MCD) meat supplier in Asia, who was accused of repackaging expired meat and picking meat up off the floor and putting it into circulation.

Shanghai Husi Food Co Ltd, a unit of Illinois-based OSI Group, also provided meat to Yum Brands (YUM), which owns KFC and Taco Bell.

The company did say earlier this week that it was expecting the problems in China to lead to decreased sales worldwide for July.

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