According to an email sent to U.S. employees, suppliers, and franchisees, and reviewed by The Wall Street Journal, McDonald’s Corp. is planning layoffs as it restructures regional offices around the country.
“I recognize that change is difficult, and that eliminating layers within our organization means some employees will ultimately exit our system,” McDonald’s USA president Chris Kempczinski said in the email, as reported by The Wall Street Journal.
Kempczinski added that McDonald’s expects to trim the layers between field consultants and CEO Steve Easterbrook from eight to six. Additional details are forthcoming at McDonald’s scheduled June 12 town hall meeting.
A McDonald’s spokeswoman declined to tell the WSJ how many jobs would be affected, only that the move was expected to help the company better support U.S. franchisees.
McDonald’s previously cut an undisclosed amount of corporate jobs as it aims to reduce administrative expenses by $500 million by the end of 2019. Kempczinski said in the memo that McDonald’s will become a more nimble organization under the changes. It has worked to decentralize operations and offer increased flexibility for franchisees in recent years, even giving regional leaders the ability to create special menu offerings per their markets.
McDonald’s has been working to revitalize U.S. sales for some time as well. A 2016 study showed that the brand lost about 500 million orders in the U.S. to other chains in the previous five years.
Easterbrook laid out a Turnaround Plan in May 2015 that included a global restructuring plan and a refranchising initiative designed to save the company $300 million. His Velocity Growth Plan rolled out in March 2017.
There have been several key components, including The Experience of the Future redesign, a commitment to technology, kiosk, delivery, and the overall reworking of some menu offerings. All-Day Breakfast was one hit, as has been the presentation of premium products alongside new value choices. Fresh Beef Quarter Pounders is a recent push (as of March, fresh beef was offered in 3,500 U.S. locations) and the commitment to core menu products and simplification. McDonald’s also pledged to invest in better ingredients, including chicken raised without antibiotics important to human medicine (which it will phase in globally by 2027 but has already completed in the U.S.) and cage-free eggs (which it will phase in by 2025), while also removing corn syrup from hamburger buns and artificial preservatives from items like Chicken McNuggets.
McDonald’s posted comparable same-store sales gains of 2.9 percent in the U.S. and 5.5 percent globally in the first quarter. McDonald’s solid showing marked the 11th consecutive quarter of positive comparable sales and fifth straight of positive guest counts.