McDonald’s To Shut More Outlets In US: Burger Major Hurt By Rising Competition And Falling Sales

McDonald’s, world’s biggest chain of hamburger fast food, is slimming down in the U.S. market. For the first time, in more than 40 years, McDonald’s will be slashing more number of restaurants in the U.S. than it opens in that country. In April, McDonald’s announced closure of about 700 underperforming locations across the world including many locations in the U.S too.

Steve Easterbrook, CEO, McDonald’s is spearheading a restructuring of the company to make it more nimble and growth-oriented. But the irony is McDonald’s will be closing more restaurants in the U.S. than it will be opening in 2015. Such a disconcerting thing never happened since 1970, according to a review by Associated Press on McDonald’s regulatory filings.

According to Becca Hary, McDonald’s spokeswoman, the reduction in outlets would be “minimal” compared with its total outlets of 14,300 in the U.S. The store closings in the U.S will have a mix of franchised and company-owned locations, Hary said.

Turnaround Plan

Quite recently, McDonald’s announced a turnaround plan. Norman Levine, managing director of Portfolio Management Corp called the plan being short of substance. According to him, McDoland’s rapid expansion over the years has been on the back of its offer of consistent food at affordable prices. That formula thrived even during the recession, with its Dollar Menu drawing people in hordes and products like McCafe coffee also pushed up sales.

Analysts say, of late, chains like Chipotle calling themselves as “serving better food and ingredients” have underpinned McDonald’s monopoly. Also the arrival of a new breed of “better burger” chains such as Five Guys Burgers and Fries has weaned away many of its loyal customers.

According to a leading analyst, McDonald’s past success drove the company into state of “a natural overconfidence.” John Gordon, a restaurant industry analyst with Pacific Management Consulting Group said, “McDonald’s is such an internally focused organisation, it’s a situation where you don’t have a fresh perspective coming in.” Some of its executives blame the excessive complications in menu for inaccurate orders and longer wait times. Adding to that was the burger firm failing to keep pace with changing tastes.

All Day Breakfast

Meanwhile, McDonald's is getting ready to spread its all-day breakfast to many markets in the U.S. including Mississippi. After tasting success with its McMuffin menu all day, at many San Diego locations, the fast food major is keen to replicate the all-day premise with biscuit sandwiches in many U.S. markets. In July, McDonald's will be taking the all-day breakfast to 132 locations in Nashville, according to Pam Williams, McDonald's marketing director.

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