McDonald’s sales fall 2.5% after China food scare

McDonald’s said its July sales slumped 2.5% as the company faces competitive pressures at home and deals with fallout from a food scare in China.

The Oak Brook, Ill., company is struggling to fend off rivals in the U.S. who are luring away diners with cheaper options or healthier, more upscale fare. McDonald’s reported that its U.S. sales last month fell 3.2% among restaurants open at least 13 months, the third straight month of declines.

Adding pressure to its sales was the food scare in China prompted by a local TV report last month. McDonald’s was forced to apologize to its Chinese customers after regulators shut down a local supplier that was accused of putting new expiration labels on old beef and chicken, and mixing expired bits of meat with fresh cuts. The company temporarily took off menu items such as Big Macs and Chicken McNuggets.

The controversy drove down sales by 7.3% in its Asia, Middle East, and Africa regions.

The hamburger chain reiterated its warning that the quality concerns in China could put its global sales in 2014 “at risk.” The company said last month that it expected global comparable sales in 2014 to be “relatively flat.”

Don Thompson, chief executive of the fast food chain, described July’s results as “not in-line with McDonald’s expectations.”

“We intend to strengthen our performance by addressing the current business headwinds,” he said in a Friday statement.

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