Dive Brief:
- McDonald’s is temporarily shuttering its U.S. corporate offices ahead of layoffs. These impending job cuts are part of a larger brand reorganization, and were first reported by The Wall Street Journal.
- Domestic office workers, as well as some international employees, have been asked to work remotely between Monday and Wednesday so leadership can lay off employees virtually. The chain also instructed corporate staff to cancel in-person meetings with vendors at its headquarters.
- It’s unclear how many office employees will be impacted by job cuts, but these reductions are part of a larger company reorganization as the chain seeks growth. McDonald’s didn’t immediately respond to a request for comment.
Dive Insight:
This layoff report comes just a few months after CEO Chris Kempczinski wrote in an email to employees that company growth plans may include staff reductions. The burger chain did not share how many roles would be eliminated, or what departments would be most impacted, at the time.
“Some jobs that are existing today are either going to get moved or those jobs may go away,” Kempczinski told The Journal in January.
These changes are part of the chain’s “Accelerating the Organization” plans, which the chain wrote in an email in January would establish a new operating model for the company. This is a subsegment of McDonald’s Accelerating the Arches overhaul plan, which was introduced in 2020 and has since been updated to “Accelerating the Arches 2.0.”
“Our vision for this new business unit goes well beyond what we have established so far – allowing us to leverage economies of scale while improving the effectiveness and efficiency of end-to-end processes,” Kempczinski wrote in a January message to employees.
Kempczinski also said in January that McDonald’s corporate structure is “outdated and self-limiting,” and that it would change its organization of “center, segments and markets.” The company also announced four executive promotions earlier this year, which could aid this strategy shift. Two longtime board members announced they are retiring last week.
“We’re divided into silos,” he wrote. “We are trying to solve the same problems multiple times, aren’t always sharing ideas and can be slow to innovate.”
McDonald’s sales continue to improve despite reduction plans. In Q4 2022, the chain saw a 10.3% rise in same-store sales growth. The chain’s domestic performance is benefiting from price-sensitive diners trading down to the QSR segment as economic worries grow, eclipsing McDonald’s Q4 2021 same-store sales increase of 7.5%.
It’s possible that job reductions could ease some financial pressure on the chain as inflation and labor costs squeeze major restaurant companies and adjacent firms. In 2023, McDonald’s expects G&A expenses to hover between 2.2% and 2.3% of systemwide sales, the company told investors on its Q4 2022 earnings call. Kempczinski said on the call that in past years, “delayering at the senior level” has helped G&A.
“I think certainly, the best way to work through any kind of short-term pressures is to continue to make sure we're driving strong top line momentum,” he said.
As of 2022, McDonald’s global corporate employee count exceeded 150,000, according to the company’s February 10-K filing. This total is much smaller than McDonald’s 2019 global corporate payroll, which included 205,000 employees. Roughly 70% of this workforce is located outside of the U.S.
In 2022, Sweetgreen, ChowNow, DoorDash and Lunchbox cut staff.
