Employee Layoffs Planned At McDonald’s Corporation (NYSE:MCD) In Turnaround Effort

Reports indicate that U.S. burger chain McDonald’s Corporation (NYSE:MCD) is planning to lay off employees as it seeks to shrink the corporate structure with a view to turning around the business in its domestic market. According to an email which was sent to franchisees, employees and suppliers, the president of McDonald’s USA, Chris Kempczinski, stated that regional offices across the country would be restructured.

In the email Kempczinski indicated that layers within the organization would be eliminated and consequently leading to loss of jobs. Per a source the layers that exist between the burger chain’s chief executive officer and field consultants would be cut from eight to six. More details are expected to be revealed next week during a scheduled town hall meeting.

More decentralization

Per a spokesperson for McDonald’s the new structure which is being instituted in the United States is meant to offer improved support to franchisees with a view to assisting the burger chain become more competitive, nimble and dynamic. Going forward McDonald’s aims to become more decentralized with a view to quickening the pace at which decisions are made.

By the close of next year McDonald’s intends to cut administrative costs by approximately $500 million. Though the figures haven’t been disclosed several corporate jobs have already been eliminated. The cost-savings are expected to be reinvested in technology.

For over three years now the burger chain has been involved in efforts aimed at turning around its U.S. business which has been struggling. For instance in the first quarter the number of store visits in the United States fell by around 5% and this was attributed to intense competition from rivals. Growth in foreign markets was however better.

Touch-screen ordering kiosks

Earlier this week the fast food chain disclosed that touch-screen ordering kiosks would be introduced to thousands of outlets across the United States with a view to supplementing in-store employees. According to the restaurant chain there is a tendency by customers to purchase more when they order on a screen compared to when they are interacting with a restaurant employee.

In an interview with CNBC the chief executive officer of McDonald’s, Steve Easterbrook, touch-screen ordering kiosks will be added to around 1,000 outlets every quarter. This will translate to approximately 10 outlets a day for the next 24 months. The development is coming late to the U.S. business of McDonald’s as the touch-screen ordering kiosks have already been fully installed in Canada and the United Kingdom for instance. The first country to have the touch-screen ordering kiosks installed was France.

Besides investing in technology McDonald’s has also embarked on other initiatives aimed at turning around its business fortunes. This includes remodeling stores and menu changes. The introduction of higher prices for the menu items and new high-end offerings saw sales in the United States increase by close to 3% despite a decline in store visits. Menu changes have included offering all-day breakfast items. The burger chain has also improved food quality by introducing quarter-pound burgers which are made using fresh beef instead of frozen beef.