McDonald's last stand in Japan: French fries drizzled in chocolate syrup

Customers like Shigeaki Yamaguchi may be the last hope for McDonald's Japan as it battles slumping sales in the wake of an embarrassing string of food scandals.

At a location in Tokyo's busy Shinjuku district, Yamaguchi munched on the chain's newest culinary offering - french fries drizzled in brown and white chocolate syrup.

"Delicious," the 37-year-old proclaimed as he dug into the sticky 330 yen ($2.90) mass known as the McChoco Potato.

"The reason I came is that I wanted to taste products that didn't exist until now."

Love them or hate them, social media spun into a frenzy over chocolate fries, and customer numbers rose in January for the first time in several years - just as the salty-sweet creation launched.

"The chocolate fries have been extremely popular with customers, and actually not just customers in Japan," the unit's president Sarah Casanova said last week.

"They have made the news and blogs and SNS (social networking services) all over the world."

Still, food industry watchers warn it will take more than the apparent success of chocolate fries to save the fast-food chain's bacon.

Market share in Japan slipped to 10.4 percent in 2014 from nearly 14 percent five years earlier, according to market research firm Euromonitor, putting the chain well behind ubiquitous convenience stores stocking a wide range of food, and Japanese quick-service chains.

McDonald's Japan last week reported an annual loss of 34.7 billion yen ($304 million), its second straight year in the red and the biggest shortfall since opening its first store in Tokyo's posh Ginza district in 1971.

"Undoubtedly, 2015 was the most challenging year we have faced in our 45-year history," Casanova said.

US-based McDonald's is mulling the sale of some if its stake in the Japan unit, which has closed hundreds of its 3,000 locations and renovated others in recent years.

Some analysts speculate the buyer will be the Japan-based owner of the 7-11 chain of convenience stores.