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. Last Updated: 07/27/2016

McDonald's Japan Shuts 176 Outlets

TOKYO -- McDonald's Japan unit has decided to close down an unprecedented number of unprofitable outlets and will finish in the red for the first time in 29 years, the company and media reports said.

Sales dropped following an outbreak of mad cow disease in Japanese herds last year, which made beef patties an extremely unappetizing option for many restaurant goers.

McDonald's Holdings Co. Ltd. said in a statement it decided to close down 176 of its 3,890 restaurants next year to "drastically improve the company's profit structure." The number of planned closures was reportedly the largest since the U.S. hamburger chain set up shop in Japan in 1971.

The measure will force the company to take a one-time charge of 4.93 billion yen ($40.74 million), the statement said.

The company now expects a group net loss of 2.33 billion yen for the year ending Dec. 31, reversing a profit estimate of 530 million yen it had issued two weeks ago.

It left unchanged its estimates for group sales and for group profit before tax and one-time charges at 320.67 billion yen and 1.75 billion yen, respectively.

The net loss will be the first for McDonald's Japan unit since 1973.

Despite efforts to beef up menu selections and slash prices, McDonald's took a beating from the mad cow scare in Japan last September.

Although McDonald's in Japan uses Australian beef, which has not been infected with the brain-wasting bovine disease, monthly sales were down by as much as 18 percent at some outlets from the previous year.

Since Asia's first case of the brain-wasting disease turned up here in September 2001, many Japanese consumers have avoided beef, hurting business at meat shops and steak houses.

New openings next year will be kept to less than half of this year's figure, the business daily Nihon Keizai reported.