Friday, May 12, 2006

McDonald's Japan profit tumbles: Should McDonald's serve Asian menu more!

(By Razib Ahmed)
In the first quarter of this year, McDonald's Japan suffered 99% decrease in profit compared to same time of the previous year. McDonald's Japan is the number one fast food chain in Japan and McDonald's Corp. has just under half the share and the other half is owner by McDonald's Holdings Co. (Japan). You can read the financial statement of the company for Q1 of 2006 by visiting this link. I am quoting from its website here:

"McDonald's Company (Japan), Ltd., a consolidated subsidiary, has been successfully pursuing its New Value Strategy started in April 2005. It achieved an increase in the transaction count at existing restaurants for the quarter by 6.9% over the same period last year, while it also increased the sales at existing restaurants by 0.8% over the same period last year.
As the result, the financial performance for the quarter turned out 86,036 million yen for the consolidated sales and 2,096 million yen for the consolidated ordinary income. However, the net profit for the period turned out 22 million yen as the extraordinary loss of 2,086 million yen was recorded due to the introduction of the asset-impairment accounting system.
At this point, there is no change in the consolidated business forecast for the fiscal year released on February 10, 2006."

I do not want to go into details about these numbers. I just want to point out one matter here. I really think that McDonald's should change its focus in Asian countries like Japan. Starting from Bangladesh, the more eastward you go in Asia, you can find that people are more fan of fish and vegetables instead of meat. Of course, fast food is popular now in every country because of their taste, use of too much oil and meat and finally it takes less time to eat fast food. However, in South East and East Asia, people are more fan of rice, fish and vegetables and I believe that McDonald's should try to keep this fact in their mind and invest some money in developing new recipes and food items centering on these 3 materials (rice, fish and vegetable).

Many people in South East and East Asia are Buddhists and they are not exactly big fans of meat. So, if McDonald's can come up with delicious food items attract this market, this can indeed turn out to be a huge market for the fast food chain.

Just two days ago, I saw a report in Chicago Tribune, " McDonald's sales post biggest jump in year" and I came to know:
" McDonald's Corp. on Tuesday reported its largest monthly sales increase in more than a year, boosted by the biggest gain in Europe in at least three years.
The Oak Brook-based burger giant said global sales at restaurants open at least 13 months climbed 6.2 percent in April. Such same-store sales are considered the best indicator of a retailer's health.
European sales jumped 9.3 percent from a year earlier, while U.S. sales rose 4.1 percent. Sales in the Asia/Pacific, Middle East and Africa region posted a 6.5 percent gain."

So, McDonald bosses should try to cater the Japanese market more with the foods and taste they are habituated too.

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