McDonald’s Is Closing Hundreds Of Stores — Find Out Why
Apparently the public isn’t “lovin'” McDonald’s the way it used to. The fast food giant had previously planned on closing 350 stores across the United States, China, and Japan. According to Fortune, “sagging profits” are to blame, and it was hoped this step would be enough.
It wasn’t.
The contents of a recently disclosed conference call with Wall Street analysts reveal that McDonald’s has decided to close an additional 350 or so stores, bringing the total number of expected closure to several hundred. With the first three hundred stores closing now and another few hundred to close in the coming months, some wonder if these closures are the beginning of a new trend for the fast food chain. If so, it wouldn’t be too surprising.
McDonald’s will close hundreds of underperforming stores: http://t.co/3oFrKeSNrn pic.twitter.com/RhyRLlPyqR
— Wall Street Journal (@WSJ) April 23, 2015
McDonald’s may have benefited from the recession, but things have changed post-recession. The American dollar is stronger, Europe’s economy is shaky, and McDonald’s has stiff competition to contend with both at home and abroad.
On Wednesday, McDonald’s reported an 11 percent decrease in revenue and a whopping 30 percent drop in profits for the first three months of 2015. McDonald’s has found itself struggling out of a slump that has continued over the past couple of years. Dropping the dead weight in the form of under-performing stores may help a little. McDonald’s CFO Kevin Ozan told analysts that the McDonald’s restaurants that were closing were all “heavy loss maker restaurants.”
Another cause for struggle and concern is that McDonald’s may be suffering from the wage push on the part of many employees, demanding the restaurant pay livable wages.
McDonald’s global sales are falling. Slightly more upmarket chains are eating into its profits http://t.co/CRIV1hKjAx pic.twitter.com/jW1Hac8PNo
— The Economist (@TheEconomist) April 23, 2015
The good news is supposed to be around the corner for McDonald’s, which is reportedly due to announce a strategy for pushing the global franchise in a new, positive direction. For instance, the introduction of a new, premium burger. It’s noted that pricier burgers were yanked off the McDonald’s menu previously due to being too expensive.
McDonald’s is getting ready to reinvent itself as a ‘modern, progressive burger company’ http://t.co/Z7TG1wJeVZ pic.twitter.com/INP4UKz0eQ
— Business Insider (@businessinsider) April 22, 2015
The food quality may also be driving American consumers away. Thanks to initiatives like “Let’s Move” by Michelle Obama and a greater interest in eating healthier, better-quality food, many consumers see McDonald’s as representing the antithesis of good food.
McDonald’s has experienced push back and negative perceptions before. However, the fast food giant has remained something of a constant in American history. Although it’s set to close hundreds of stores, it’s worth remembering that there are tens of thousands of McDonald’s restaurants around the world.
Perhaps if McDonald’s wants to shake up its profits, it could consider putting certain foods on the menu not available in the United States. Who wouldn’t want to try an Oreo cone or an Atlantic Lobster Roll?
[Image Credit: Mike Mozart]
