The Real Reason McDonald's Closed Over 200 Restaurants In 2021
The COVID-19 pandemic has hit the restaurant industry hard. According to Fortune, as of November 2021, a whopping 90,000 restaurants closed due to complications from the pandemic. With a number of states shuttering indoor dining at the start of the virus' spread, many restaurants could not make enough money on takeout alone to keep their doors open, especially the spaces that didn't have room to develop an outdoor dining area.
Even major brands, such as McDonald's, were not exempt from feeling the effects of the pandemic. Eat This, Not That! reports that McDonald's closed 239 restaurants in 2021. However, the fast-food giant actually did so in a strategic way, one that ultimately boosted sales for the chain. While Mickey D's did shut the doors of the restaurants that were turning a lower profit, no decision is made carelessly. McDonald's knew exactly how to position itself in a way where restaurant closures would only help the company's overall profit.
McDonald's closed stores to boost sales
McDonald's' decision to close more than 200 stores actually came with an overall boost in profits. That's because, according to Eat This, Not That!, the company chose to close spots that were essentially bringing down the chain's average sales per unit. Since each location makes, on average, $3.4 million per year, those McDonald's locations that were substantially below that mark (and in turn were negatively affecting the chain's average sales) were closed.
McDonald's' closing of these underwhelming stores helped to increase its average store sales. That, combined with an increase in prices as well as higher-quality menu items sold at a higher cost, resulted in McDonald's sales growing.
Restaurant Business reports that the fast-food giant's sales have grown by nearly a third in the last five years, despite its number of locations declining. Plus, QSR Magazine reports that McDonald's brings in more money in sales than any other fast-food chain in the country. It's safe to say these shuttered locations aren't hurting it in the long run.