McDonald's Japan has suffered its second straight year of losses, hit by slumping sales and a long falling-out with its founder, Den Fujita.
Mr Fujita is no longer part of the picture
McDonald's Holdings Japan, half-owned by the US fast-food giant, posted a 2003 net loss of 7bn yen (£36m; $68m).
In December, it said it would pay 6.3bn
yen to rid itself of a consulting contract with Mr Fujita's firm.
Mr Fujita opened the first Japanese McDonald's outlet in 1971, but the partnership has since cooled.
Weak sales over the past couple of years have been blamed on muddled marketing, increasing the pressure on the firm to shake up its strategy.
Ups and downs
McDonald's Japan, which listed on the Tokyo stock market in 2001, insisted it was optimistic about 2004.
The firm said it expected to post a net profit of 2.9bn yen this year, mainly thanks to a new global marketing campaign - McDonald's first - under the slogan "i'm lovin it".
Worldwide, McDonald's has started to register sales growth and profits, in part because of responding to increasing demand for healthier products.
In Japan, trading conditions have been tougher, because of the weak economy, and the greater severity of food scares such as mad-cow disease and avian flu.
Further costs were triggered by its withdrawal from a Pret-A-Manger sandwich chain joint venture.