McDonald’s Seeks To Close More Stores
In the midst of its sales decline in April for the U.S. as well as the Asia/Pacific, Middle East and Africa (APMEA) market, McDonald’s Corporation will reportedly be closing more stores than it will open for the first time in 40 years. Although the exact numbers are not being provided by McDonald’s spokeswoman, Becca Hary, Associated Press reports that the said closure will be “minimal,” as compared with its total of about 14,300 locations throughout the U.S. Moreover, the said closures will reportedly target underperforming locations that are either franchised or company-owned.
In its press statement, McDonald’s admits that the sales slump is mainly caused by two factors: ongoing competition and “negative customer traffic.” Moreover, the negative guest traffic in all major market segments is said to be behind its global comparable sales decrease of 2.3% during the first quarter of 2015.
In response to this, McDonald’s plans to re-energize the market by providing limited-time menu as well as the chance for diners to personalize their meal. In fact, McDonald’s is already utilizing its Create Your Taste touch screen machines to allow diners to choose among several toppings, cheeses and sauce options for their burger.
As far as the future is concerned, McDonald’s President and Chief Executive Officer Steve Easterbrook remains optimistic about it, announcing initial steps towards the company’s turnaround plan last May. These include restructuring market segments so that it is organized according to markets with similar “needs, challenges and opportunities for growth.”
In this new plan, the U.S. market, making up over 40% of McDonald’s 2014 operating income, will represent one market. Meanwhile, markets which collectively represent around 40% of the company’s 2014 operating income will become part of the international lead markets. These include Australia, Canada, France, Germany and UK. On the other hand, markets showing good restaurant expansion and franchising potential will be part of the high growth markets segment while the rest will be known as foundational markets.
McDonald’s believes this will be an important step towards achieving “long-term profitable growth.” In fact, it has recently set a new refranchising target of 3,500 restaurants by the end of 2018. This is expected to increase its global franchised percentage from 81% to 90%.