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McDonald's warns of big hit from China meat scandal

McDonald's said on Monday (August 4) that a recent scandal over expired meat from a Chinese food supplier has had a "significant negative impact" on sales in China, Japan and some other markets.

NEW YORK: McDonald's said on Monday (August 4) that a recent scandal over expired meat from a Chinese food supplier has had a "significant negative impact" on sales in China, Japan and some other markets.

The fast food giant also said it was working to regain customer confidence in a region that accounts for 10 percent of its revenues.

On July 21, Shanghai officials shut the Shanghai Husi Food Co. following a television report alleging the plant mixed out-of-date meat with fresh product. Chinese police later detained five Shanghai Husi officials.

As a consequence, "McDonald's businesses in China, Japan and certain other markets are experiencing a significant negative impact to results," the company said in a quarterly securities filing.

"McDonald's is undertaking recovery strategies to restore the trust and confidence of our customers," it added.

Last week, McDonald's said it stopped using food from all Chinese plants owned by Shanghai Husi's parent company, US-based OSI Group.

Japanese McDonald's restaurants also halted the sale of products made with chicken from China.

Both McDonald's and OSI have apologised for the safety problems and pledged action to ensure meat quality.

The McDonald's warning follows a similar statement last week by Yum Brands, which said the scandal has had a "significant, negative impact" on sales at its Pizza Hut and KFC chains in China.

McDonald's shares fell 0.7 percent to $93.68 in midday trade.