McDonald’s McDownsizing For The First Time Ever
The supersized global fast-food chain, McDonald’s is slimming down this year for the first time ever in the company’s history.
With outlets in nearly every part of the world, McDonald’s is regarded as the benchmark of a global corporation. The success story of the company is a perfect example of how a good idea can be transformed into a world-beating empire, adding glossy franchise after glossy franchise.
However, in 2016, something uncharacteristic of McDonald’s is happening and it’s raising eyebrows, at least in America. The company is closing down more outlets than it is planning open, shrinking for the very first time since the company launched operations when Ray Kroc opened its first franchise in 1955.
350 McDonald’s outlets have already been closed down since the beginning of 2016. Plans are underway to shut down 350 more “under-performing locations” in Japan, China and the United States by the end of the year. While closure of underachieving outlets is a common yearly occurrence with the giant fast food chain, the closures have always been offset by the opening of more franchises.
This year, the company is planning to open only 300 new locations across the globe, less than half of the outlets to be closed. Clearly, demand has dipped even as McDonald’s USA says that the company is “restructuring” and “streamlining” operations.
Shedding excess fat
The company has been an embodiment of globalization, entrepreneurship and “rapid expansion” as founder Ray Kroc puts it, and its decision to shrink its global presence has caught many people by surprise. Understandably, the company has not let out many details about the decision to close stores. However, it notes that a similar move by Starbucks in 2008 has turned around the company’s fortunes for the better.
The warning signs have been there long enough for the company to take hint and competing businesses have sprung up and established themselves. The new rivals of the burger giant have been applying the company’s methods of targeting kids, clever marketing and franchising. Additionally, they have aimed at and hit the McDonald’s where it hurts most – food quality.
For decades, the menu at McDonald’s largely hinges on speed (as well as salt) as the basis of its operations, and quality is hardly mentioned. The company has consequently plunged into difficult realities with many people conscious of their dietary needs turning to the new gourmet burger market. Most people aren’t troubled about paying a little more to get better quality food.
Even McDonald’s executives have conceded that the company has an exceedingly complex menu that often leads to erroneous orders as well as lengthened waiting times, and that the burger market leader has not been at par with changing consumer tastes.
Many patrons have turned to chains such as Chipotle who market themselves as offering higher quality meals, and McDonald’s has consequently suffered a slump in sales. Also, new chains serving “better burger” like Fries and Five Guys Burgers have taken away sizeable business from McDonald’s in the U.S.
Even though McDonald’s is closing down some stores, it is still the largest burger chain in the U.S. and the world by far. The company isn’t apparently worried by the closures with spokesperson Becca Hary saying that the reduction is “minimal” compared to the company’s 36,000 locations across the world.