McDonald’s CEO Chris Kempczinski has been with the company since 2015 having previously been an executive at Kraft Foods
- McDonald’s has said it is slashing jobs and will begin layoffs in April 2023
- CEO Chris Kempczinski described the company as unfocused in a staff memo
- The chief maintained job cuts are not money saving but will help grow the firm
- McDonald employs around 200,000 people in corporate roles and company-owned restaurants worldwide
- The announcement comes as other giants such as Amazon and Salesforce reveal plans to cut thousands of jobs
McDonald’s CEO Chris Kempczinski has revealed plans to slash corporate jobs later this year to help the business grow.
In a letter to staff on Friday, the fast-food giant boss said there would be ‘difficult discussions and decisions ahead’ and warned that the company had become unfocused.
‘We had across the globe 70 different, distinct versions of what a crispy chicken sandwich would look like,’ he wrote. ‘I don’t need 70 different permutations of a chicken sandwich.’
McDonald’s employs around 200,000 people around the world in corporate roles and company owned restaurants, with around 75 percent of those located outside of the US. Kempczinski said that the chain will begin layoffs in April 2023.
The news comes as a host of major firms – primarily in the technology sector – announce mass redundancies amid fears the US will plunge into a recession this year.
In his letter to staff, Kempczinski pointed out that the crispy chicken sandwich, pictured right, has 70 unnecessary versions worldwide
The Chicago-based burger restaurant operates 40,000 restaurants in over 160 countries with a total of two million staff in its franchised outlets. Around 13,000 of those locations are in the United States.
The CEO also wrote in the letter: ‘Today, we’re divided into silos with a center, segments, and markets.’ The memo was titled Accelerating the Arches 2.0.
He continued: ‘This approach is outdated and self-limiting – we are trying to solve the same problems multiple times, aren’t always sharing ideas and can be slow to innovate.’
Kempczinski also demanded the company speed up the rate of new restaurant openings in order to cope with demand.
In an interview about the job cuts with The Wall Street Journal, Kempczinski said, ‘Some jobs that are existing today are either going to get moved or those jobs may go away.’
He went on to tell the Journal that the company does not have a set amount of jobs expected to be terminated or money that needs to be saved.
McDonald’s worldwide growth has stalled due to the rise of the dollar and Russia’s invasion of Ukraine. Recently, the company announced it was pulling out of Kazakhstan, which shares a border with Ukraine, due to supply problems created by the war.
Following the invasion, McDonald’s was one of the many Western companies that pledged to leave Russia. The restaurant first opened in Moscow in 32 years ago, regarded as a significant sign of the thawing of the Cold War.
Kempczinski also wrote in the letter to staff: ‘While there’s a lot for us to be proud of, you’ve also told us that there’s more we can do. We’re performing at a high level, but we can do even better.’
On Friday, McDonald’s shares were up two percent with the company expected to publish its fourth-quarter earnings on January 31.
In the third quarter of 2022, McDonald’s reported earnings of $5.8 billion down from $6.2 billion during the same period in 2021.
Typically, fast-food restaurants do well during times of economic gloom as consumers seek to save money.
McDonald’s saw signs of growth in 2022 as prices were raised on core items, the company also adapted to the Covid-19 pandemic by investing in delivery.
At the same time Kempczinski’s memo was being sent, workers removed the branding from McDonald’s outlets in Kazakhstan’s biggest city, Almaty.
‘It was one of the nicest places where I used to spend time with my friends,’ said local resident Karina told Reuters, who only gave her first name.
‘I doubt any other company will be able to compete with McDonald’s in Kazakhstan at the moment as no other fast food chain can replicate the menu that McDonald’s had for the same price.’
Many Kazakh businesses have faced supply problems in the wake of Russia’s invasion of Ukraine and the Western sanctions against Moscow that followed. Neighboring Russia is Kazakhstan’s main trading partner.
Also on Friday, the Japanese operator of McDonald’s restaurants announced its third price hike in less than a year.
McDonald’s Holding Corp Japan said it would raise prices on about 80 percent of its menu from January 16, citing currency fluctuations as well as surging costs for materials, labor, transportation, and energy.
News of the job cuts came as Amazon said Wednesday that it would be slashing about 18,000 positions. It’s the largest set of layoffs in the Seattle-based company’s history, although just a fraction of its 1.5 million global workforce.
‘Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,’ CEO Andy Jassy said in a note to employees that the company made public. ‘These changes will help us pursue our long-term opportunities with a stronger cost structure.’
He said the layoffs will mostly impact the company’s Amazon Stores division — which a spokesman said encompasses its e-commerce business as well as company’s brick-and-mortar stores such as Amazon Fresh and Amazon Go — and its PXT organizations, which handle human resources and other functions.
Salesforce, meanwhile, said it is laying off about 8,000 employees, or 10 percent of its workforce.
The cuts announced Wednesday are by far the largest in the 23-year history of a San Francisco company founded by former Oracle executive Marc Benioff.
Benioff pioneered the method of leasing software services to internet-connected devices — a concept now known as ‘cloud computing.’
The layoffs are being made on the heels of a shake-up in Salesforce’s top ranks. Benioff’s hand-picked co-CEO Bret Taylor, who also was Twitter’s chairman at the time of its tortuous $44 billion sale to billionaire Elon Musk, left Salesforce.
Then, Slack co-founder Stewart Butterfield left. Salesforce bought Slack two years ago for nearly $28 billion.