The reason for the closures? Major revenue loss.
Coronavirus has left its mark on 2020 in various ways. Now, it looks like McDonald’s is also being heavily impacted by the ongoing pandemic. The franchise plans to close 200 locations by the end of 2020 due to heavy revenue loss.
According to the Financial Times, McDonald’s recently suffered a revenue loss of 30 percent, its lowest profits in 13 years. The dip in sales is what led to the decision to close 200 locations. McDonald’s CFO Kevin Ozan confirmed the suspicion of these closures to Restaurant Business Online.
As the pandemic continues, more people are staying home. This has led to a major decline in both food and retail sales. Due to this, over half of the McDonald’s locations closing are within Walmart stores.
“The U.S. is accelerating some restaurant closures previously planned for future years,” Ozan says. “Of the 200 U.S. closures for this year, over half are low-volume restaurants in Walmart store locations.”
Despite these anticipated closures, McDonald’s is still keeping plenty of locations open and prepared with new safety procedures.
“Within a matter of weeks, the McDonald’s system made operational modifications across 30,000 restaurants, while closing and then reopening another 9,000 restaurants,” CEO Chris Kempczinski says. “We introduced new safety procedures in all our restaurants, modified our menus and developed new contactless ways to serve our customers.”
At this time, McDonald’s has not revealed the other locations that are closing this year. However, there are various other locations to choose from. There are reportedly over 13,000 McDonald’s in the United States alone and over 40,000 McDonald’s restaurants worldwide.
McDonald’s is one of the latest chains to face financial problems amid the pandemic. Starbucks plans to close up to 400 stores. As well, the operator for Wendy’s and Pizza Hunt filed for bankruptcy due to major revenue losses. Taco Bell also recently announced its plan to revamp its menu. The changes are to better suit the current times as coronavirus cases continue to spike in the United States.
What are your thoughts about McDonald’s closing 200 locations this year? Let us know in the comments below.