McDonalds Holdings Co (Japan) Ltd announced it would offer only small-sized frech fries for the near future as the fast-food chains supplies of potatoes are nearly depleted due to import delays.
The prolonged labor dispute between 20 000 dockworkers and the Pacific Maritime Association has played its part in the major delays that started in October across container ports along the US West Coast. The fallout from the disagreements has hurt Japan as the country is the biggest export market for US frozen potatoes.
A US Potato Board official said last week, cited by Bloomberg, that port delays have doubled delivery times to Japan, and it now takes four weeks for the frozen potatoes to reach their destination.
“If we continued offering fries in sizes other than small, there was concern that some stores will face a shortage of supplies by the year-end or early next year,” said McDonald’s Japan.
The worlds largest fast-food chain said it will sell its menus that include fries different than small size, at a discounted price.
The company took measures to counter the effects of the dispute, importing more than 1 000 tons of frozen products by air, which began arriving last Monday. McDonalds Japan also started utilizing different ports located on the US east coast to ship around 1 600 tons of potatoes. However, those deliveries are projected to reach Japanese land in late January.
Air deliveries, however, increase the cost of imported goods for restaurants, which are already having cost-related difficulties due to the weaker yen.
Kokoro Toyama, a spokeswoman for the company, did not specify how long the restriction will last, but said it would allow customers to buy as many small-sized french fries as they like. She also didnt comment on how those actions would affect the already troubled performance of the companys 3 100 stores in Japan.
For the nine months ended December, McDonalds Japan reported a loss of ¥7.5 billion with a 13% decline in revenue compared to last year. The disappointing results are partly due to the food scandal that one of McDonalds suppliers was involved in, the China-based company had breached a number of food safety rules, including changing the expiration date on old chicken meat.
McDonalds Japan gained 0.33% on Monday, but lost 1% on Tuesday and closed at ¥2 685 in Tokyo, marking one-year decrease of 4.28%. According to the Wall Street Journals three analysts, who rate the stock at “sell”, the price targets for McDonalds Japan are at high: ¥1 700.00, median: ¥1 400.00 and low: ¥1 200.00.
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