McDonald’s will close 200 locations in the US as it faces a bumpy recovery from COVID-19 pandemic after second quarter global sales FALL by 30% due to lockdowns limiting operations to drive-thru and delivery
McDonald’s will close 200 locations in the United States as the chain faces a bumpy recovery from the COVID-19 pandemic after second quarter global sales dropped by 30 percent due to lockdowns limiting operations to drive-thru and delivery.
The fast-food company reported a bigger-than-expected drop in second-quarter profits on Tuesday as a result of much lower sales due to coronavirus closures that affected most of the chain’s worldwide network.
The fast-food company suffered a 68 percent drop in profits to $483.8 million, following a 30 percent decline in revenues to $3.8 billion.
McDonald’s is set to accelerate restaurant closures this year across the US and plans to permanently close 200 locations. More than half are lower sales locations that are inside Walmart stores.
In the US, where it operates more than a third of its restaurants, same-restaurant sales fell 8.7 percent. It was better than the anticipated 9.97 percent fall, given most locations were able to stay open with drive-thru and delivery options.
Same-store sales fell 41 percent in international markets, reflecting temporary store closures in the United Kingdom, France and other countries.
Sales improved throughout the quarter in the US and in some international markets as governments lifted lockdown restrictions and more activity resumed.
Of the chain’s 39,000 restaurants worldwide, 96 percent are now open, compared with 75 percent at the start of the second quarter. Comparable-store sales that were down 39 percent in April were down only 12 percent by June.
Restaurants have been struggling to cope with the changing dynamics and consumer behaviors amid the pandemic, forcing them to simplify menus and shift largely to online and mobile orders for pickup, delivery and drive-thru.
‘Our strong drive-thru presence and the investments we’ve made in delivery and digital over the past few years have served us well through these uncertain times,’ Chief Executive Officer Chris Kempczinski said.
To help drive its recovery, McDonald’s, like many other US restaurant chains and retailers, said face coverings would be mandatory at its stores in the United States and employees would offer one to anyone entering without a mask.
The company said about 96 percent of its restaurants were operating with drive-thru, delivery or reduced seating capacity.
After reopening 2,000 dining rooms with reduced seating in the US, the company paused reopenings in early July as coronavirus cases spiked.
Last week, McDonald’s said it will delay dining room reopenings for at least another month.
McDonald’s is spending heavily to convince people to come back, particularly for breakfast.
The Chicago company spent more than $200 million to support franchisee marketing during the second quarter.
It also paid $31 million to distribution centers – payments normally made by franchisees – and $45 million to cover franchisees’ debts.
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