McDonald's temporarily closes U.S. offices as chain prepares for layoffs

McDonald’s Corp. MCD 0.69% will temporarily close its U.S. offices this week in preparation to inform corporate employees about layoffs that will be undertaken by the burger giant as part of a comprehensive restructuring of the company. 

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In an internal email sent last week, employees of the Chicago-based fast-food chain as well as some international employees were advised that they should work from home from Monday through Wednesday so that it could make staffing decisions through virtual communication. Among the instructions that were included in the message was the request that employees cancel any in-person meetings with vendors and outside parties at their headquarters. 

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“We plan to notify key decisions related to roles and staffing levels across the organization by the end of the week of April 3,” the company stated in the message viewed by Trade Algo. 

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There have been no comments from McDonald's on the number of employees who have been laid off as of Sunday. 

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McDonald's recently announced that as part of a broader strategic plan for the hamburger chain, it was going to be making "difficult" decisions about how to update its corporate staffing levels by the end of April. According to CEO Chris Kempczinski, when he gave an interview at the time, he expected to save money as a result of the workforce assessment, but at the time he did not have a set dollar amount or a number of jobs that he intended to eliminate. "There are some jobs that are present today that may either have to be moved, or they may have to be eliminated completely," Mr. Kempczinski said in an interview.

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More than 150,000 people work for McDonald's globally in corporate roles and in the chain's owned restaurants, with 70 percent of them located outside the U.S., the chain said in February. 

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As McDonald's acknowledged in the message, the week of April 3 is a busy one for personal travel, which is one reason why it decided to deliver the news remotely during the week of April 3. As a result, the company is recommending that employees who do not have access to a computer during the week provide their manager with their personal contact information. 

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“ It is important to us that our people remain comfortable and confident during the period leading up to the notification,” according to the company. 

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A slowing economy is leading to headcount reductions across a broad range of industries in response to concerns about the economy. There have been mass layoffs in the retail and manufacturing sectors as a result of layoffs that began in the tech sector last year. As part of the previously announced layoffs, Amazon.com Inc. announced last month that it will eliminate 9,000 more jobs over the next few months.

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As Twitter Inc. notified its employees in November that headcount reductions were a possibility, it announced that the company's offices would be temporarily closed to ensure the safety of its employees, Twitter's systems, and customer data. Employees who were in the office or on their way to the office were asked to leave the premises and go home.

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While retailers have reported a slowdown in consumer spending in recent weeks, McDonald's sales have remained steady. 

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A company executive told investors in January that some lower-income consumers were ordering fewer items per visit or opting for cheaper options, but the majority of customers continued to patronize its restaurants and spend their money. 

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The McDonald's Corporation has been laying off a significant number of employees over the past several years. McDonald's was reported in 2018 to be cutting its top management in order to make the company "more dynamic, nimble and competitive," with the layoffs slated to occur by the year's end under the company's plan to reduce administrative costs by half a billion dollars by the end of the year. 

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Mr. Kempczinski, who was the company's U.S. president at the time, did not disclose the details of the headcount reduction, but he did mention that the reduction included regional offices within the chain. During the year 2019, McDonald's reported that it employed 205,000 people around the world across all its corporate roles and owned restaurants, which is down from 235,000 in 2017.

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McDonald's recently released a message in which it expressed the concern that the sprawling company operated in too many silos, which resulted in redundancies and slowed the pace of innovation at the company. In an announcement, the chain announced that it intended to consolidate its work on some projects while stopping or reducing its work on others.