McDonald’s closes offices ahead of layoffs

Employees were told to stay away from the office while announcements go out about which of them will be laid off.

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The main entrance to McDonald’s headquarters on April 3, 2023.

McDonald’s has closed its offices ahead of a round of layoffs.

Stefano Esposito/Sun-Times

Stay out of the office while we decide if you’re coming back.

That was the message McDonald’s has given its corporate employees, including those at its Chicago headquarters. The fast-food giant has temporarily shuttered office sites in the U.S. as it notifies people about layoffs.

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

The company warned of job cuts in January but portrayed them not simply as cost-cutting but as part of a strategy for nimbleness and efficiency. Executives have sought to distinguish their strategy from the layoffs at technology companies.

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

A locked door at McDonald’s headquarters.

McDonald’s employees who showed up Monday were directed to a side entrance, where it appeared they were admitted after their names were checked against a list. The workers declined to comment.

Stefano Esposito/Sun-Times

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

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

“It’s become almost cruelty to ask people to come to an office they don’t normally go to just to lay them off,” Challenger said. He said staff may prefer remote notices of termination rather than the old office experience of a dreaded “tap on the shoulder” from a human resources representative.

A reputed memo from the company about the layoffs was posted on the website TheLayoff.com. It said McDonald’s wanted to “ensure the comfort and confidentiality of our people during the notification period” and would hold all notification meetings virtually. A McDonald’s spokesperson was unavailable to say if the memo was authentic.

In a Jan. 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 evaluate roles and staffing levels in parts of the organization and there will be difficult discussions and decisions ahead.”

During a January conference call with stock analysts, Kempczinski said, “We have historically been very decentralized in some areas where we reinvent the wheel way too often. And I think the other thing I’ve seen is we haven’t been as sharp around our global priorities, and so there’s been proliferation of priorities.’’

McDonald’s has more than 150,000 employees in corporate jobs or at restaurants the company owns. About 95% of its restaurants are owned by franchisees. Workers at the franchised restaurants are not part of the layoff plans.

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

Though the U.S. labor market remains strong, layoffs have been mounting, mainly in the technology sector, where many companies over-hired after a pandemic boom. IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter and DoorDash have all announced layoffs in recent months.

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

Contributing: Associated Press

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