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U.S. brands assess damage in Japan

Restaurant operators grapple with closures, blackouts after disaster

U.S. restaurant companies operating in Japan are taking a hit in the grim aftermath of a devastating earthquake and tsunami last week.

Analysts reportedly are predicting the larger U.S. public companies, such as McDonald’s, Yum Brands Inc. and Starbucks, will experience low-single-digit exposure to profits as a result of the earthquake. For those chains, most locations in Japan are operated by franchisees.

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Others, like chef David Myers of Los Angeles-based David Myers Group, who recently opened two restaurants in Tokyo’s chic Ginza district, say they are struggling to remain open amid difficulties finding food supplies and rolling blackouts that shorten operating hours. The disaster also has spawned fears of rising radiation levels after nuclear facilities were damaged.

“Tokyo is a ghost town,” said Myers, who left Japan two days before the earthquake. “The people who could leave left.”

Myers said his restaurants suffered only small-scale damage and they remain open. The staff there is struggling to find basic ingredients from the less-affected southern regions of Japan, but the company lost no employees.

“As soon as it’s clear from a radiation standpoint, we want to dig in and figure out how we can help,” he said.

Other companies also said they are working day-by-day with franchise operators to offer support.

“It’s a fluid situation,” said Jonathan Blum, spokesman for Louisville, Ky.-based Yum Brands Inc., which has about 1,530 locations in Japan, most of them KFC restaurants, representing about 4 percent of the global system.

Blum said about 150 Yum’s franchise locations in Japan are closed as a result of the disaster.

Burger King Holdings Inc. said the chain has 48 locations in Japan, of which only one has closed. Company officials said they are working with the Red Cross and the chain’s Asia-Pacific counterparts to “identify both short-term and long-term support needed to aid local efforts.”

Seattle-based Starbucks Corp., reportedly has about 900 coffeehouse locations in Japan, and about 100 of those have closed since the earthquake.

McDonald’s, based in Oak Brook, Ill., has 3,302 locations in Japan, and company officials say 200 have closed as a result of the disaster.

Heidi Barker Sa Shekhem, McDonald’s senior director of global external communications, said, “We are very thankful that nearly all of our people have been accounted for and are safe.

“We remain concerned for everyone coping with the aftermath,” she added. “Our crisis team on the ground is working around the clock to address the needs of our employees and their families, our restaurants, and to help support all of the local communities affected by this devastation.”

Wendy’s/Arby’s Group Inc. recently announced a joint venture partnership that would give Wendy’s a presence again in Japan, though no restaurants have opened yet.

Bob Bertini, a spokesman for the brand, said, “We do not anticipate this current crisis will impact our future development plans.”

Domino’s Pizza has about 180 franchise locations in Japan, but none has closed, said Tim McIntyre, the company’s vice president of communications.

“None are in the north, so all are still intact and operating,” he said. “The country is facing rolling blackouts, so business gets interrupted in that sense, but nothing of note. In the face of this tragedy, we are so grateful all our team members are safe and accounted for.”

Contact Lisa Jennings at [email protected].

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