McDonald's Just Announced Sad News For Walmart Shoppers
McDonald's might have been able to ride out the early days of the pandemic by streamlining its offerings and dropping a few things (for the time being at least) like its breakfast menu, but even the fast food giant has suffered a few hits along the way. As a result, McDonald's will be permanently closing 200 locations across the country — but the stores aren't being selected at random (via USA Today). "The U.S. is accelerating some restaurant closures previously planned for future years," McDonalds CFO Kevin Ozan said during a call with investors. "Of the 200 U.S. closures for this year, over half are low-volume restaurants in Walmart store locations" (via Restaurant Business).
During the 1990s, McDonald's added to its restaurant count by opening hundreds of branches inside Walmart stores across the country. But a change in strategy means McDonald's will be closing its Walmart locations, as well as those inside malls and other retail areas, mainly because the company now prefers locations with drive-thru windows. Restaurant Business says 95 percent of McDonald's U.S. stores have a drive-thru, and as a whole, they have done better financially than stores that don't offer the same feature.
McDonalds earnings fell 30 percent as a result of the pandemic
The closures don't just have to do with a change in business strategy, because McDonald's has been hit by the pandemic, too. CNBC reports that the restaurant's revenue fell by 30 percent at its U.S. restaurants for the second quarter that just ended, although CEO Chris Kempczinski thinks the worst is behind the company. "In many markets around the world, most of notably in the U.S., the public health situation appears to be worsening," he says. "Nonetheless, I believe that Q2 represents the trough in our performance as McDonald's has learned to adjust our operations to this new environment."
McDonald's seems to be relying on its drive-thru business to put the "big" back into its Big Macs. "The number of drive-thrus impacts the market's pace of recovery," Ozan says (via Restaurant Business). "Markets with a higher percentage of drive-thrus are showing quicker recovery. Markets with a higher concentration of city center and mall restaurants are seeing a heavier impact from reduced foot traffic."