Smith Brain Trust / April 13, 2023

A Huge Shakeup at McDonald’s: What Does it Mean for the Fast Food Giant’s Future?

A Huge Shakeup at McDonald’s

Last week McDonald’s temporarily closed its U.S. offices, sending workers home to await word online about the burger chain’s plans. While working from home, hundreds of corporate workers were told their services were no longer needed, something that has grown in popularity in recent years. You may remember Twitter laid off workers en masse via email. McDonald’s is undergoing a major global restructuring that also reportedly involves closing field offices, and reducing the compensation packages of many office workers, while promoting others.

Some experts say these moves are setting the fast food behemoth up for growth. McDonald’s is bringing on tech-savvy new leadership and it’s believed that’s exactly what American restaurants need. Judy Frels, academic director of the Master of Science in Marketing Analytics program at the University of Maryland Robert H. Smith School of Business says “when I lived in France 10 years ago, you never had anybody at McDonald’s take your order, you would actually order at a kiosk. So, I think they’re implementing similar technology here.” The chain’s strategic plan outlines 4D’s “which are delivery, digital, drive-thru and development, and this would be consistent with that.”

An example of this innovation is a highly automated McDonald’s in Fort Worth, Texas. It has “no indoor seating, but it’s all about ‘pickup and go,’” says Frels, “they’re just trying to modernize to current customer taste.” Everyone became accustomed to having to pick up restaurant food and either eat it at home or on the go during the pandemic, when restaurant dining rooms were closed.

The Fort Worth location is the only McDonald’s of its kind in this country. A dedicated drive-thru lane lets people order ahead and pick up their food from a conveyer belt. An employee is available to answer questions throughout the process, and kiosks inside accept cash or credit. Parking is available curbside for pickup and food couriers like those from GrubHub have a dedicated area on-site to streamline their interaction with the business.

McDonald's is planning to open 1900 locations this year, its largest growth move in nearly 20 years. Northcoast Restaurant Research Analyst Jim Sanderson tells Yahoo Finance last week’s layoffs are part of the company’s plans to become more streamlined and centralized. The chain certainly doesn’t appear to be in financial trouble. According to McDonald’s most recent annual report, its global sales rose by almost 11% in 2022, with nearly 6% of that in the U.S.

Is competition playing a role in this restructuring? “Yes, definitely,” says Frels, who points to McDonald’s having chicken as one of the growth pillars in its strategic plan. “Five years ago, chicken wouldn’t have been there.” McDonald’s is ranked as the most popular fast food chain, but others like Chick-Fil-A and Popeyes, who primarily sell chicken, are nipping at McDonald’s heels.

The kind of innovation the king of burger chains is planning may be the wave of the future and there’s evidence others in the restaurant industry are already changing things up in this space. Frels says, “as a marketer I find it really fascinating.”

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