Growth Club
1851 Growth Club
NRN: McDonald’s to Halt New-Unit Growth and Reduce Remodels
The franchise aims to save $1 billion after same-store sales drop 13.4 percent in U.S.
Franchise behemoth McDonald’s is feeling the squeeze of COVID-19’s impact on the economy just as much as the rest of the industry. According to an article in Nation’s Restaurant News, the brand is taking some drastic measures to save money.
The brand announced Wednesday that president and CEO Chris Kempczinski will be taking a 50-percent salary cut, new restaurant growth will be paused worldwide and new “Experience of the Future” store remodels will be reduced. Those measures, the brand projects, will save McDonald’s $1 billion in 2020.
In March, the franchise’s U.S. division saw same-store sales decline 13.4 percent. Globally, same-store sales fell by 22.2 percent in the same period.
COVID-19 and the pandemic’s dire economic fallout may not be solely to blame for the franchise’s recent woes.
A KeyBanc Capital Markets report suggests that McDonald's was also hurt by Wendy's breakfast rollout in March: "Although breakfast seemed to help McDonald’s traffic trends during January and February, we believe the morning daypart is especially vulnerable to the disruption of consumer behavior. In addition, we believe Wendy’s breakfast rollout, which drove 15% SSS growth in the first week of March, likely weighed on McDonald’s breakfast trends ahead of the heavy quarantine period."
In March, McDonald’s announced it would temporarily phase out all-day breakfast to streamline operations. The franchise has also secured $6.5 billion of new financing.
