Shrimp Burgers To The Rescue

For most of the past two years, Eikoh Harada's jump from iMac to the Big Mac has looked like a pretty bad move. In March, 2004, Harada quit as president of Apple Computer Inc.'s (AAPL ) Japanese business and took over as chief executive of McDonald's there. Although he had earned praise for turning around Apple's operations, many doubted he had what it took to combat slumping sales and profits in McDonald's second-biggest market after the U.S.

Until recently, it looked as if the doubters might be right. True, under Harada annual sales have risen 8.5%, to $2.8 billion. But last year, net profits slumped 98%, to $515,000. The weak earnings stemmed partly from restructuring costs, but a big factor has been a strategy of pricing Big Macs, fries, and other items at just 100 yen (85 cents). "The cheap burgers attract customers but don't contribute to earnings," says Yasuhiro Matsumoto, an analyst at Shinsei Securities Co. in Tokyo.