McDonald’s closes offices amid layoffs ft

Please stay out of the office while we decide whether to return.

That was the message McDonald’s has given to its corporate employees, including those at its Chicago headquarters. The fast food giant has temporarily closed offices in the US while it notifies people of the layoffs.

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

The company warned of job cuts in January, but described them not just as cost cutting, but as part of a strategy for agility and efficiency. Executives have sought to distinguish their strategy from layoffs at tech companies.

McDonald’s has said it is pursuing an “Accelerate the Arches” program that focuses on “delivery, drive-thru, digital and development.” Its strategy includes adding about 1,500 sites, mostly outside the US, to its 40,000 worldwide locations this year.

At the company’s headquarters at 110 N. Carpenter St., the main entrance was closed Monday. Some employees who showed up were directed to a side entrance, where they were apparently admitted after their names were checked against a list. The workers declined to comment.

Andy Challenger, a senior vice president at relocation firm Challenger, Gray & Christmas, said it’s the first time he’s seen a company tell staff to stay home awaiting layoff notices. He said the practice could become more widespread and acceptable with remote work.

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

In a January 6 letter to employees, CEO Chris Kempczinski said, “We’re performing at a high level, but we can do even better.” He said the company was divided into silos and that the approach was “outdated and self-limiting.”

As the company reshapes its approach, he said, “we will be evaluating roles and staffing levels in parts of the organization and there will be tough discussions and decisions ahead.”

During a January conference call with stock analysts, Kempczinski said: “Historically we’ve been very decentralized in some areas where we reinvent the wheel too often. And I think the other thing I’ve seen is that we haven’t been as precise about our global priorities, so there’s been a proliferation of priorities.”

McDonald’s has more than 150,000 employees in corporate positions or in company-owned restaurants. About 95% of its restaurants are owned by franchisees. The workers of the franchised restaurants are not part of the dismissal plans.

Revenue in 2022 came in at $23.18 billion at McDonald’s, up 6% from the previous year, but net income fell about 13% after currency adjustments to $6.18 billion. The company has cited inflationary pressures and difficulties hiring enough people for some outlets.

Although the US job market remains strong, layoffs have been on the rise, mainly in the technology sector, where many companies overhired after the pandemic boom. IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter and DoorDash have announced layoffs in recent months.

Policymakers at the Federal Reserve have forecast that the unemployment rate may rise to 4.6% by the end of this year, a sizable rise historically associated with recessions. The rate is currently 3.6%.

Contributing: Associated Press