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Bracing for deep losses, McDonald's Japan to close 131 outlets

By Karen Graham     Apr 17, 2015 in Business
McDonald's Corporation-Japan is forecasting deeper losses this year with the planned renovation of 2,000 of its 3,100 stores, along with closing 131 under-performing stores, putting 100 employees out of a job.
While McDonald's is giving pay raises to many of its U.S. employees, McDonald's Japan has enacted a stringent performance-based salary schedule for its workers. The severe belt-tightening is the result of a long list of food-safety issues.
The Japan News is reporting that on Thursday, The company announced that it is projecting a net loss of ¥38 billion (US$210 million) for the current business year to December. In 2014, McDonald's Japan incurred its first annual net loss in 11 years following the revelation that a Chinese supplier had used chicken past its expiration date.
McDonald’s Japan President Sarah Cassanova announced at a news conference that she and other executives are taking full responsibility for the slack earnings, and will voluntarily take 20 percent pay cuts for the next six months. She also expressed her determination that the company will be back in the black by 2016.
McDonald's Japan plans to renovate 500 stores this year, and is unsure of the 2015 dividend, given the not so rosy outlook for the company. The company has been struggling worldwide as sales have declined because of changing tastes and eating habits.
The Japan stores have had it even worse since last July when it was discovered they were serving outdated chicken. Added to their woes, earlier this year, foreign objects were found mixed in the products, including a human tooth and pieces of plastic.
McDonald's Japan also explained the new pay system for employees. There will be pay-cuts for unproductive employees and pay raises for productive employees. Ms. Cassanove said she would incorporate “every measure possible” in making 2016 a profitable year for the company.
According to Fortune, Shares of McDonald’s Japan are down about 11 percent from a peak in June, 2014. McDonald's Japan stock closed down one percent prior to Thursday’s announcement.
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