After a series of food safety scandals in the Chinese market, the fast-food giant McDonald’s Corporation (NYSE:MCD) is all set to increase it supplier audits in the country. The announcement came after another food scandal discovered in July and it even affected McDonald’s sales throughout the month.
McDonald’s Corporation (NYSE:MCD) is gearing up to improve its supplier food standards and as reported to Reuters, the company will conduct unannounced audits with the help of internal teams and third part auditors. The fast-food restaurant chain will employ more quality control specialists in China with higher video surveillance.
This is not the first time the company has to face supplier crisis and earlier this month; Chinese Authorities banned Shanghai Husi Food Co. because of its expired meat sales to the restaurants. Further, McDonald’s Corporation (NYSE:MCD) even mentioned that these supplier problems are likely to affect its quarterly results especially in Japan, China, and other similar markets. It is quite likely that these markets will affect up to 10% of the global revenues of McDonald’s Corporation (NYSE:MCD).
Another incident occurred last week with the Chinese authorities arresting six staff personnel of OSI Group Inc, another McDonald’s supplier. The staff was excused of using expired meat and tampering the production labels of the material. On an overall, it can have a negative impact considering that China is the third-largest market for McDonald’s and the company has over 2,000 restaurants in the country.
Other major brands such as Yum! Brands, Inc. (NYSE:YUM) is facing a similar supplier crisis in China and the company has been trying to regain customer trust in the country. The company had a negative impact on its same-store sales for both KFC as well as Pizza Hut.
This article has been written by Prakash Pandey.