“Not Lovin’ It”: McDonald’s Slashes Pay Closes Offices, Layoffs Workers

This week, the fast-food giant McDonald’s Corp. initiated an organizational restructuring that involved layoffs, reshuffling employees, and the closure of some offices. The Wall Street Journal provided an in-depth view of the critical corporate changes as recession threats surge.

We reported on Monday that McDonald’s told US employees and some international staff that they should work from home in the first half of the week so it could deliver staffing decisions virtually.

“The restructuring this week is reaching company-wide, resulting in hundreds of layoffs and for some employees reductions in their compensation packages,” WSJ said, citing people familiar with the matter. 

Some employees were offered the opportunity to stay with the company but with reductions in their compensation packages, including changes to titles and benefits.

An internal company memo on Thursday showed the corporate restructuring unfolded in multiple waves this week. The memo said there were changes to positions and promotions for other employees, including ten corporate officers working across finance, operations, and marketing.

The company announced plans to shut down its field offices by summer, citing underutilization and the need for a more efficient national structure. In another internal email, Joe Erlinger, president of McDonald’s USA, voiced concerns the fast-food chain’s complex structure needed to be streamlined.

“While the McDonald’s Brand is in the strongest position it has been in years, we also recognize that our business has grown increasingly complex in recent years,” Erlinger said in an email.

Advising McDonald’s on its restructuring efforts has been done by consulting firm McKinsey & Co. This isn’t the first time the fast-food chain has undertaken such an effort. In 2018, it was able to streamline operations that saved $500 million in administrative expenses.

According to McDonald’s latest annual report, it has 150,000 employees across corporate and other offices and in company-owned and operated restaurants. Months ago, it said staffing levels would be readjusted.

The job cuts are part of a broad restructuring as companies across many other industries reduce headcounts ahead of a possible recession.

And already, McDonald’s revealed a slowdown in lower-income customers ordering fewer items.

McDonald’s is preparing for some economic landing, which might be “hard.”