McDonald’s remodels to take longer than planned

McDonald’s is slowing the pace of domestic restaurant remodels that Chief Executive Officer Steve Easterbrook has championed since he took the helm in 2015.

The world’s biggest restaurant chain, which had originally planned to update most of its free-standing U.S. locations by 2020, is now giving its franchises until the end of 2022 to include additions like self-order kiosks, new systems for more delivery orders and extra drive-through lanes at some locations.

The extended timeline comes as the burger chain faces appears to face pushback from its franchisees, who own and operate more than 90 percent of global locations. Those owners gathered in October to discuss cash flow and financial concerns, and they are scheduled to meet again next month. Although McDonald’s has said it will contribute more than half of the funds to upgrade the restaurant locations for remodels completed by the end of 2020 and 40 percent for projects that take another year or two, the costs are still high for restaurant owners.

“This is a response to some of the franchisees’ concerns,” Bloomberg Intelligence analyst Mike Halen said. “The franchisees recently met because they’re not happy with their profitability now. To me, this looks like an answer to that.”

McDonald’s independent group of franchisees, the National Owners Association, didn’t reply to requests for comment. A spokeswoman for McDonald’s declined to comment on the extended timeline but sent an emailed statement.

“Our growth strategy remains rooted in making positive food changes, offering new restaurant experiences and providing our guests better value,” spokeswoman Andrea Abate wrote in the email, noting that about half of locations have been modernized already. “The adjustments we are making will allow us to continue on this path and provide greater local operator flexibility.”