McDonald's to shrink in US, 1st time in decades

ASSOCIATED PRESS
NEW YORK
Published 18.06.2015 22:48
Updated 18.06.2015 22:54
McDonald's to shrink in US, 1st time in decades

The burger chain that put "supersize" into the American vernacular is slimming down: For the first time in more than 40 years, and perhaps ever, McDonald's says its number of restaurants in the U.S. is shrinking.

McDonald's plans to close more restaurants in the U.S. than it opens this year, according to the world's biggest hamburger chain. That hasn't happened since at least 1970, according to an Associated Press review of McDonald's regulatory filings. Becca Hary, a McDonald's spokeswoman, declined to provide a specific figure but said the reduction would be "minimal" compared with its total of about 14,300 U.S. locations. Still, the contraction is symbolic of troubles under the Golden Arches and how it's trying to regroup. The company enjoyed rapid expansion for much of its history by offering consistent food at affordable prices. ıt even thrived during the recession, when its Dollar Menu drew in people trying to save money and new products like McCafe coffee drove up sales. But since then, chains like Chipotle that market themselves as serving better food and ingredients have chipped away at McDonald's dominance. A new breed of "better burger" chains such as Five Guys Burgers and Fries is taking away customers, too.

McDonald's past success led to "a natural overconfidence," said John Gordon, a restaurant industry analyst with Pacific Management Consulting Group. "McDonald's is such an internally focused organization, it's a situation where you don't have a fresh perspective coming in," Gordon said. McDonald's executives have also conceded that an overly complicated menu led to inaccurate orders and longer wait times, and that they failed to keep pace with changing tastes. In April, McDonald's said it would close about 700 underperforming locations around the world this year, including in the U.S. CEO Steve Easterbrook, who stepped into the role on March 1, also later laid out plans to restructure the company to remove layers of bureaucracy and move more nimbly. In any given year, some underperforming McDonald's restaurants will close. But previously, the number of closings has been outweighed by new restaurants that open.

The U.S. store closings will be a mix of franchised and company-owned locations, Hary said. She noted that the closings are part of a strategic review intended to set the stage for the future growth. McDonald's Corp. has not reported an annual reduction in U.S. locations since at least 1970.

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