McDonald’s to shrink in U.S. for 1st time in decades
The hamburger chain plans to close more restaurants than it opens this year.
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 Corp. says the number of U.S. restaurants it has is shrinking.
McDonald’s plans to close more restaurants in the U.S. than it opens this year, the world’s biggest hamburger chain said. That hasn’t happened since at least 1970, according to a 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. It 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. Chief Executive Steve Easterbrook, who stepped into the role March 1, also later laid out plans to restructure the Oak Brook, Ill., 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 has not reported an annual reduction in U.S. locations since at least 1970, according to archived filings with the Securities and Exchange Commission.
The company declined to comment on the last time that it reduced its U.S. store base. But given the rapid expansion that characterized its early years, it’s likely that McDonald’s hasn’t pulled back since Ray Kroc founded the company in 1955.
Even though it’s closing locations, McDonald’s easily remains the country’s biggest hamburger chain. It still has more than twice as many restaurants as No. 2 Burger King, according to the industry tracker Technomic.
And McDonald’s is still growing globally. It plans to add about 300 restaurants to its worldwide total of more than 36,000.
DESPITE CLOSURES, McDonald’s easily remains the country’s biggest hamburger chain with about 14,300 U.S. restaurants. Above, a store in New York City.