Fast-food restaurant chain operator McDonald's is accelerating the closure of its underperforming outlets given the current economic situation. The company announced during its earnings call on Tuesday that the move could affect around 200 out of its 14,000 restaurants in the United States.
McDonald's chief executive officer Chris Kempczinski said during the earnings call that the move will be implemented over the next couple of weeks. He stated that there will also be operational modifications to more than 39,000 restaurants worldwide.
Around 9,000 restaurants will temporarily be closed for the modifications and then reopened once they are completed. The modifications will include new safety procedures, protocols, and ordering systems to mitigate the spread of the disease.
Meanwhile, the aforementioned 200 U.S. restaurants will be permanently closed. Most of the affected outlets are the company's "low-volume restaurants," which includes those inside retail stores such as Walmart. McDonald's stated that it had actually planned to gradually close down those restaurants but the pandemic has accelerated the move.
As of July, around 96 percent of McDonald's global outlets had already reopened. The gradual reopening of its outlets had contributed to an uptick in the company's in-store sales, which improved from 39 percent in April to a 12 percent decline in June.
The company stated that its restaurants with drive-thru windows were performing much better than those without the service. It added that outlets inside malls, tourist locations, and more urban centers were still struggling to return to previous sales levels.
Last week, McDonald's announced that it would be requiring both its employees and customers to wear masks when entering its restaurants. The company will reportedly also be providing free masks for customers that had not brought one with them.
McDonald's announcement comes after several fast-food chains had also permanently shut down their underperforming stores amid the slump in demand. Dunkin' Donuts had announced that it would be shutting down up to 450 of its locations before the year ends. Last month, Starbucks announced that it will be closing up to 400 of its company-operated locations over the next 18 months.
A report published by online review publisher Yelp this week revealed that over 60 percent of restaurants that had been forced to temporarily shut down in the United States will be permanently closing. The months of continued closures had proven to be too much of a financial burden for most businesses, particularly for smaller firms that don't have much liquidity to endure the prolonged slump.
