McDonald offers shrimp burger in Japan
(AP)
Updated: 2005-10-14 16:10

Struggling to lure customers back amid increased competition, McDonald's is adding a new item to its menu in Japan: the shrimp burger. The 270 yen ($2.40), burger, shown to reporters Friday and set to go on sale this month, is the latest effort by the Japan unit of the U.S. fast-food chain to win over Japanese palates — and spark sales.

McDonald's Holdings Co. Japan Ltd. sales crew Kana Hattori shows off the humberger chain's new addition, shrimp burger, as it is unveiled to the media in Tokyo Friday, Oct. 14, 2005. Struggling to boost profits amid a price plunge for eating out, the shrimp burger is to keep a turnaround going, and is testing other new products, including yogurt and chicken salads. [AP]

McDonald's Japan is also testing other additions, including chicken salad and yogurt.

The hamburger chain with more than 3,700 stores in the world's second largest economy has tried everything from tofu burgers to advertising blitzes to coax diners back to the Golden Arches after the company posted a loss in 2002 amid the mad cow scare.

"Many people who used to come to McDonald's had stopped coming, but they're coming back," said Eikoh Harada, who took over as chief executive in 2004.

Profits at McDonald's Holdings Co. (Japan) Ltd., about 50 percent owned by the U.S. McDonald's Corp., have been gradually recovering since its first loss in 29 years in Japan. Although McDonald's uses Australian beef unaffected by mad cow disease, the fatal brain-wasting ailment, Japanese consumption of beef — and Big Macs — dropped sharply at the time.

A major challenge for Tokyo-based McDonald's, which is still Japan's No. 1 restaurant chain, has been to ward off intensifying competition from a burgeoning spate of discount eateries and convenience stores.

Also, the Japanese market is increasingly problematic for McDonald's: people are having fewer children while the population is growing older and health-conscious.

Jotaro Fujii, a food business consultant with experience in the Subway sandwich chain, believes McDonald's is running out of ways to cut costs but still having a hard time raising prices.

"It needs to communicate its true value of American culture and hamburger culture, but now it's coming off like another cheap store," Fujii said, adding that people are increasingly turning to low-calorie Japanese dishes as well as to gourmet burgers.

Friday's news conference, held at a McDonald's outlet in Tokyo, included taste-tests of recent menu offerings such as a grilled chicken sandwich and yogurt with granola — all a change of pace from the Big Mac.

The shrimp burger developed especially for Japan is a bit similar to the Filet-O-Fish, except it's filled with shrimp.

Harada denied speculation he may step down amid some criticism that he wasn't delivering on the turnaround quickly enough.

"I have absolutely no intentions to step down," he said. "I have a lot of things left to do."

Harada also defended his decision to introduce the 100 yen (90 cents) items, including the cheeseburger, as critical to coaxing people back to McDonald's.

In the United States, McDonald's offered 99 cent Big Macs, but the discount menu has shrunk and salads can cost $5 or more. The new chicken salads in Japan, which aren't offered at all stores, cost 450 yen ($4).

Senior Vice President Pat Donahue, Harada's predecessor, who oversees the U.S.-Japan partnership said he had faith in Harada and a solid revival takes time.

"He's clearly turned that decline around," Donahue said. "To permanently turn our business around and have sustained profitable growth requires rebuilding a foundation for our business."

Last month, McDonald's Japan lowered its profit forecast for the fiscal year ending Dec. 31 to 50 million yen ($437,000) profit, down from the earlier projection for 3.5 billion yen ($31 million) profit, citing temporary additional personnel costs.

McDonald's Japan shares, which have lost about a fifth of their value since the summer, were unchanged Friday at 2,005 yen ($17.5) on the Jasdaq Securities Exchange in Tokyo.