McDonald’s closes offices ahead of layoffs

Please stay out of the office until we determine if you are returning.

That’s the message McDonald’s has given to its corporate employees, including those at its Chicago headquarters. The fast-food giant has temporarily closed its US office sites as it notifies people about layoffs.

A spokeswoman confirmed the temporary closures, but declined to say how many jobs may be cut or how long it will be before the offices reopen. The Wall Street Journal, which first reported the company’s move, said the offices would remain closed until Wednesday.

The company warned of job cuts in January, but portrayed them not simply as cost-cutting but as part of a strategy for speed and efficiency. Executives sought to differentiate their strategy from layoffs at tech companies.

McDonald’s has said it will pursue an “accelerating curve” program focused on “deliveries, drive-thru, digital and development”. Its strategy this year is to add about 1,500 sites, mostly outside the U.S., to its 40,000 global locations this year.

McDonald’s employees who arrived on Monday were directed to a side entrance, where they were admitted after their names were checked against a list. The workers declined to comment.

Stefano Esposito/Sun-Times

At the company’s 110 N. Carpenter St. headquarters, the main entrance was closed Monday. A few workers were directed to a side entrance where they were admitted after their names were checked against the list. The workers declined to comment.

Andy Challenger, senior vice president at outplacement firm Challenger, Gray & Christmas, said this is the first time a company has asked employees to stay home pending layoff notices. With remote work, the practice could become more widespread and acceptable, he said.

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“It’s become almost cruel to ask people to come to an office they don’t normally go to just to fire them,” Challenger said. Employees may prefer remote notifications of layoffs to the old office experience of a dreaded “tap on the shoulder” from a human resources representative, he said.

Jan. In a letter to employees on the 6th, CEO Chris Kempczynski said, “We are performing at a high level, but we can do better.” He said the company was divided into silos and the approach was “outdated and self-restricting”.

As the company reframes its approach, he said, “we will be evaluating roles and staffing levels in certain areas of the company, and there will be difficult discussions and decisions to come.”

During a January conference call with stock analysts, Kempczynski said, “We’ve historically been very decentralized in certain areas where we reinvent the wheel frequently. The other thing I’ve seen is that we’re not sharp around our global priorities, so there’s a proliferation of priorities.

McDonald’s has more than 150,000 employees in corporate jobs or company-owned restaurants. About 95% of its restaurants are owner-owned. Workers in licensed restaurants are not part of the redundancy plans.

McDonald’s had revenue of $23.18 billion in 2022, up 6% from the previous year, but net income declined 13% after adjustments to $6.18 billion. The company cited inflationary pressures and difficulty hiring enough people for some outlets.

Although the U.S. labor market remains strong, layoffs are on the rise, mainly in the tech sector, where many companies overhired after the pandemic’s growth. IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter and DoorDash have all announced layoffs in recent months.

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Policymakers at the Federal Reserve predict the unemployment rate will rise to 4.6% by the end of the year, a significant increase historically associated with recessions. Currently the rate is 3.6%.

Contributed by: Associated Press

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