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McDonald’s closes corporate offices as it prepares for layoffs

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McDonald’s closes corporate offices as it prepares for layoffs

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McDonald’s is closing corporate offices this week as the company prepares to deliver layoff decisions as part of a broader restructuring plan.

Employees of nearly a dozen offices across the country have been asked to work remotely through Wednesday while layoff announcements go out, according to reporting from the Wall Street Journal. In an email to workers last week, McDonald’s requested that employees cancel all in-person meetings at company headquarters.

“During the week of April 3, we will communicate key decisions related to roles and staffing levels across the organization,” the Chicago-based company said in the message, according to the Wall Street Journal.

A spokesperson for McDonald’s confirmed the decision to The Washington Post but declined to share any additional information, including how many people will be laid off.

McDonald’s joins a growing cadre of companies that have slashed positions in recent months. Cuts have been deepest among tech giants such as Amazon, Meta, Salesforce, Microsoft and Google, all of which hired heavily during the pandemic. But recently layoff announcements have been trickling in from companies outside tech, including J. Crew, 3M, Dow and Disney.

The burger giant counts 150,000 employees among its corporate workforce and its non-franchised restaurants. More than half of these employees work outside the United States. Its total workforce, including employees at its franchised restaurants, is over 2 million.

The layoffs come as McDonald’s embarks on a restructuring plan, “Accelerating the Arches 2.0,” in which the company aims to open more restaurants in response to increased demand. The company already has more than 38,000 restaurants in more than 100 countries, according to its website. It plans to add 1,900 locations in 2023, chief financial officer Ian Borden said in a call with investors in January.

Unlike big companies that have reduced head count to lower costs amid weak performance, McDonald’s is making the move at a moment of relative strength, according to Adam Chandler, journalist and author of “Drive-Thru Dreams: A Journey Through the Heart of America’s Fast-Food Kingdom.” The motivation is to make one of the world’s biggest corporations more “nimble,” Chandler said.

But it still strikes an odd tone for employees. “In general for morale and performance-based kinds of incentives, it doesn’t seem to make a ton of sense when you’ve been performing as well as McDonald’s has been performing,” Chandler said.

McDonald’s has benefited from recent inflationary pressures, with the company reporting in January that customers are heading to restaurants more often as they look for inexpensive meals. The burger giant has notched two consecutive quarters of heightened domestic traffic, even as other restaurants and retailers have experienced slowdowns amid widespread inflation. Its global comparable sales rose 10.9 percent in 2022 compared to the year before, the company said in its most recent earnings report.

“Overall, the consumer, whether it’s in Europe or in the U.S., is actually holding up better than what we would have probably expected a year ago or six months ago,” McDonald’s chief executive Chris Kempczinski said in January on a company earnings call.

The restructuring plan aims to “modernize” McDonald’s ways of working and help the company “scale innovations faster than ever before” to keep up with elevated demand, Kempczinski said in a message to employees at the time.

In the memo, Kempczinski noted that the company is “divided into silos,” an approach that was “outdated and self-limiting.”

“We are trying to solve the same problems multiple times, aren’t always sharing ideas and can be slow to innovate,” Kempczinski said.

Higher menu prices and strong menu innovation by McDonald’s have helped boost its traffic and customer transactions, according to Neil Saunders, managing director of analytics company GlobalData. But the company is still facing a great deal of cost pressure that’s causing it to streamline its operations.

With these layoffs, McDonald’s is “essentially getting ahead of potential pressures” on its business, Saunders said.

Fast-food prices spiked about 13 percent last year, outpacing cost increases in groceries according to Pricelisto, which tracks prices for U.S. fast-food companies and other popular businesses.

McDonald’s shares rose nearly 1 percent in trading Monday off the news about impending layoffs.

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