Economy: Amid the US slowdown, McDonald’s to layoff many this month
Virendra Pandit
New Delhi: Weeks after its CEO said the global fast-food chain will cut jobs in April to cut costs and “free up capital” to invest in growth, McDonald’s has closed many of its US offices for a few days as the company prepares to inform employees about layoffs in April.
McDonald’s has around 200,000 employees globally, about three-fourths of them based outside the United States. They are likely to be the most affected in the layoff season.
Media reports, citing an internal email from the Chicago-based fast-food giant, said on Monday the US corporate staff and some employees overseas had been asked to work from home while the company notifies people of their job status.
The reports said that McDonald’s would inform its employees this week about staffing decisions that are part of a wider restructuring of the company announced earlier.
Although the US labor market still remains strong, layoffs have been mounting since January, mainly in the technology sector, where many companies over-hired after a pandemic boom. These giants include IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter, and DoorDash, besides Goldman Sachs, which have all announced layoffs as the year 2023 began.
The Federal Reserve’s policymakers have forecast that the unemployment rate may rise to 4.6 percent by the end of 2023, a significant increase historically associated with recessions.
McDonald’s reported its global sales rose nearly 11 percent in 2022, and almost 6 percent in the US. Total restaurant margins rose 5 percent.
In January, McDonald’s said its Accelerating the Arches program would focus on deliveries, Drive Thru, digital, and development.
“We’re performing at a high level, but we can do even better,” CEO Chris Kempczinski said in a January letter to employees, adding the company was divided into silos and that the approach was outdated and self-limiting.
As McDonald’s reshapes its strategy, he said, “we will evaluate roles and staffing levels in parts of the organization and there will be difficult discussions and decisions ahead.”
Kempczinski said that “some jobs that are existing today are either going to get moved or those jobs may go away.”
“Certain initiatives will be de-prioritized or stopped altogether. This will help us move faster as an organization while reducing our global costs and freeing up resources to invest in our growth,” he said.
Media reports said McDonald’s made a lot of money during the pandemic as people ordered more takeout and sales surged.
However, the CEO said that while there’s a lot for the company to be proud of, “you’ve also told us that there’s more we can do. We’re performing at a high level, but we can do even better.”
Kempczinski said that he expects to save money as part of the staffing changes.
