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The Canadian Press - ONLINE EDITION

McDonald's Japan to strengthen checks on chicken suppliers, says earnings likely to be hurt

TOKYO - McDonald's in Japan is increasing its checks on chicken from vendors in China and Thailand after allegations a Chinese supplier sold expired chicken. It says the scare will hurt its earnings.

The U.S. fast-food chain's Japan unit on Tuesday withdrew this year's earnings and sales forecasts, citing uncertainties from the food scandal.

The Chinese food safety agency is investigating allegations Shanghai Husi Food Co., a McDonald's supplier, sold expired meat. McDonald's Japan has stopped using chicken from Husi.

Aside from McDonald's, restaurant operators in China that have withdrawn products made with meat from Husi include KFC owner Yum Brands Inc., pizza chain Papa John's International Inc., Starbucks Corp., Burger King Corp. and Dicos, a Taiwanese-owned sandwich shop chain.

Some of McDonald's Japan outlets, mostly those in the Tokyo area, have stopped serving chicken sandwiches, a change that is likely to reduce sales, McDonald's said.

It said the cost of efforts to win back the trust of customers will also erode earnings.

In February, the company forecast 6 billion yen ($59 million) in profit on 250 billion yen ($2.5 billion) sales.

It did not give a new projection for the fiscal year through Dec. 31, but said it will do so as soon as possible.

It promised to disclose information online about where its food comes from.

McDonald's said it will strengthen safety checks on suppliers it's still using in China, for apple pie, muffins and cookies, as well as its Thai chicken supplier.

Such checks will be extended to food items in Japan, the company said.

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Follow Yuri Kageyama on Twitter at twitter.com/yurikageyama

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