McDonald’s to close 700 locations as global sales slide

Reuters / Lucy Nicholson

Reuters / Lucy Nicholson

McDonald’s will close 700 restaurants worldwide this year for the first time in four decades. Faced with declining sales and increased market competition, the company says it also intends to streamline management positions.

In the US, the closings will be a mix of franchises and
company-owned restaurants, McDonald’s spokesperson Becca Hary
told the Associated Press. She said the
closings are part of a strategic review intended to set the stage
for future growth, but the reduction “would be minimal”
in light of its total 14,300 locations in the US.

While the specific number and locations of the US closures hasn’t
been revealed, McDonald’s did disclose in April that they would
trim hundreds of restaurants worldwide from their balance sheet.
The closures include 350 restaurants in the China, Japan and the
US, in addition to 350 that have already been closed.

READ MORE: McDonald’s to stop announcing monthly
sales as profits plummet

The company’s global comparison sales report for May showed that
sales had increased 2.3 percent in Europe but declined in the US
by 0.2 percent and by 3.2 percent in the Asia/Pacific/Middle
East/Africa markets. The company’s president and CEO, Steve
Easterbrook, said at the time of the sales report that McDonald’s
has “embarked on a turnaround plan to reignite our business
performance” through “great-tasting, high-quality food,
compelling value and outstanding service.”

McDonald’s restaurants have been closed before if they were
underperforming, but previously the number of closings has been
outweighed by restaurant openings. The company did say they plan
to open 300 new restaurants globally, but that won’t be enough to
counteract a contraction that is seen as emblematic of current
troubles at the Golden Arches, which is trying to regroup.
Easterbrook also said the company plans to remove layers of
bureaucracy and move more nimbly.

The company enjoyed rapid expansion for much of its history by
offering consistent food at affordable prices. It even thrived
during the recession, when its Dollar Menu drew in people trying
to save money, and when new products like McCafe coffee drove up

READ MORE: McDonald’s turnaround plan could back
pedal on minimum wage increase

While the US’ largest burger chain still leads the fast-food
industry, coming in ahead of Burger King, Wendy’s, Taco Bell and
KFC, it is facing competition from newer eateries like Shake
Shack and Five Guys, as well as places where customers think the
food is fresher, like Chipotle Mexican Grill and Panera Bread.

Worldwide, McDonald’s has 36,000 restaurants serving 69 million
customers in 100 countries. Of the thousands of restaurants, 80
percent are franchise-owned. Its first quarter earnings for 2015
were $5.96 billion globally. Last year’s global sales were $27

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