Bloomberg News

McDonald’s to Resume Full Menu in China Cities This Week

August 04, 2014

McDonald's Corp. Restaurant

A customer stands at the counter at a McDonald's Corp. restaurant in Shanghai. Customers in Chinese cities including Beijing and Guangzhou will be able to buy all the items on the menu later this week, McDonald’s said in a statement today, without specifying the number of cities. Photographer: Tomohiro Ohsumi/Bloomberg

McDonald’s Corp (MCD:US) will start selling beef and chicken burgers in some Chinese cities again, resuming its full menu almost two weeks after a supplier came under investigation for using expired meat.

Customers in Chinese cities including Beijing and Guangzhou will be able to buy all the items on the menu later this week, Oak Brook, Illinois-based McDonald’s said in a statement today, without specifying the date or number of cities. It’s also increasing orders from other existing suppliers in China while exploring new ones, the maker of the Big Mac burger said.

McDonald’s, the world’s largest restaurant chain by sales, withdrew beef, pork and chicken items from its restaurants in China after a Shanghai television station reported on July 20 how Shanghai Husi Food Co., a unit of McDonald’s long-term supplier OSI Group LLC, took expired meat and added sell-by dates of another year, renewing concerns of food safety in the country.

“International companies in China are being put to higher standards now by consumers and society as Chinese customers mature and become more discerning with their purchases,” said Sam Park, a professor of strategy at the Shanghai-based China Europe International Business School. The government is also monitoring businesses in China stricter now than in the past, which means improper behavior could be more easily detected, he said.

Executive Arrests

Aurora, Illinois-based OSI, which also supplied ingredients to restaurants including Yum! Brands Inc. (YUM:US) and Papa John’s International Inc (PZZA:US) in China, has since pulled all products made by Shanghai Husi and replaced its management team in the country after coming under Chinese government investigation. Six executives of Shanghai Husi have been arrested, the state-run Xinhua News Agency reported yesterday, citing Bai Shaokang, vice mayor and head of the public security bureau in Shanghai.

The Big Mac wasn’t available for sale in Beijing, while limited choices of burgers were being sold in Shanghai, according to McDonald’s delivery services in the two cities.

In Hong Kong, McDonald’s restaurants are serving burgers such as the Big Mac and McChicken burgers “back to their original build,” after lettuce and onion were imported from the U.S. and Taiwan, the restaurant chain said on its website today. McDonald’s Hong Kong halted sales of products supplied by Shanghai Husi late last month.

Relationship Ended

Chicken McNuggets and items such as fresh corn cups, green salad and fresh lemon tea whose ingredients were formerly sourced from OSI’s Chinese units in Hebei and Guangzhou, are still unavailable, according to the Hong Kong chain.

McDonald’s is increasing orders from existing suppliers such as McKey Food Services Ltd., a Shenzhen unit of Philadelphia-based Keystone Foods, to handle the shortage of ingredients, the restaurant operator said today. It’s also exploring new Chinese suppliers for items such as fresh produce, and is in the process of evaluating these companies.

Yum and Burger King Worldwide Inc. have cut ties with OSI since the food scandal, while McDonald said last month it will continue using food from OSI’s other operations in China.

McDonald’s has 2.6 percent of China’s fast food market with 2,000 outlets, the second-largest restaurant chain in the country by market share after Yum, according to research firm Euromonitor International Ltd.

Louisville, Kentucky-based Yum, which owns KFC and Pizza Hut, has a 5 percent share and derives more than half of its revenue (YUM:US) from China. McDonald’s, which doesn’t break out China sales publicly, received 23 percent of its revenue from the Asia Pacific, Middle East and Africa region.

The latest food safety incident renews Chinese consumers’ concerns over unsafe products in the country, following abuses that included fox DNA found in donkey meat and baby formula laced with melamine, a toxic chemical.

China’s leaders have sought to ease those concerns with a new draft law that brings increased scrutiny over the industry, harsher penalties, and more compensation for consumers.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Daryl Loo


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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $91.65 USD
    • 2.93
    • 3.2%
  • YUM
    (Yum! Brands Inc)
    • $70.6 USD
    • 1.58
    • 2.24%
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