Boots & Sabers

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1954, 03 Apr 23

McDonald’s Closes Offices Ahead of Layoffs

This is an interesting tactic.

Fast food chain McDonald’s is temporarily closing its US offices this week ahead of an expected announcement on corporate job cuts.


The Wall Street Journal, which first reported the move, said McDonald’s had told US and some international staff to work from home so it can deliver decisions on jobs virtually.


The burger chain has declined to comment on how many posts are affected.


The cuts are part of a wider company reorganisation it announced in January.


At the time, McDonald’s boss Chris Kempczinski said the company was being hurt by an “outdated and self-limiting” structure.


The Wall Street Journal said it had seen a message from the company stating that: “During the week of April 3, we will communicate key decisions related to roles and staffing levels across the organization.”


McDonald’s has also asked employees to cancel all in-person meetings at its headquarters, the paper said.

I get it. It’s a good way to avoid workplace violence. I knew a company once who never fired people on Fridays under the theory that people might stew on it over the weekend and come in Monday to blow the place up. I’m not sure I buy that theory, but it’s a thought. Perhaps McDonald’s is on to something here.

It’s going to be a crappy week for a lot of people at McDonald’s, but it’s been tough all over.


1954, 03 April 2023


  1. Tuerqas

    I went into a McDonalds for the first time in as long time 2 weeks ago. The workers were very young or very old and they are probably making more per hour than their parents who worked as managers at McDonalds in their days, even figuring inflation into the mix. I can imagine that employee rates today eat a huge portion of profit margins in the ‘cheap’ fast food market.

  2. Merlin

    A quarter pounder deluxe meal runs you almost $10 now. That’s about the only thing left on their scaled down menu that’s even edible. More expensive labor is certainly a component of that price, but more so is the effects of inflation on franchisees trapped in a captive supply chain. Franchisees (85% of their stores worldwide) are contractually obligated to buy literally everything from corporate McDonalds. Corporate purchasing benefits from economy of scale buying, but they’re not immune from how inflation significantly raises the cost of manufacturing processed foodstuffs and dry goods. As big as they are they simply cannot avoid it. They’re also not immune from ever-increasing distribution costs. The franchisees can only transfer these increased costs to the menu board until consumers decide McDonald’s products have diminished enough in value that they’re not even a good spontaneous or lazy buy. McDonald’s can’t make it selling just cold coffees for $1. This is where they are today.

  3. Tuerqas

    That is less of an increase than places like QDoba, Noodles & Co and other non-burger joint place increases over the last few years, but I agree with your points above. I would be hard to convince that the increases were not affected more by labor costs than all other increases combined, though.

  4. Merlin

    You’re correct that labor costs are up, but they’re at least somewhat static quarter to quarter. It’s manageable. I can adequately predict labor cost for the next quarter. Not so for the costs of maintaining adequate supply of quality raw materials and chemicals, energy costs to convert those to salable product, and the costs of packaging and distribution that follows. Miscalculations are brutal. Other than a scarcity of skilled labor, its cost is not currently a chief concern.

    If your business does not turn over cashflow in less than 30-45 days this inflation is slowly killing you. Discounting for quick pays has become commonplace. If supply chain increases are coming faster than your turnover, as it is for many who still do contract business, then it’s just a matter of time before you go negative. This cost spiral began with the onset of the lockdowns and has only accelerated since. Bankruptcy and unemployment are going to be increasingly headlining the news. Big names will get the attention, but the effects are always cascading. Not really a question of if, but of when.

  5. dad29

    energy costs

    Since energy is transportation AND internal-consumption electricity and natgas, “ugly” is the nicest word one can use about the next 2-3 years’ costs.

  6. Tuerqas

    I understand what you are saying, but I was just commenting on the cost increases of food at McDonalds. I didn’t think they were in danger of failure so it wasn’t part of my thought process. Just because one can predict the cost of labor does not mean it was not the main source of significant food increases over a 1-3 year span, does it? That is all I was commenting on.

  7. Tuerqas

    One may ‘manage’ the cost of a $3 pay increase across the board by raising prices to cover that predicted cost, and the owners may miscalculate by not correctly predicting inflation that should have increased prices by one dollar, but instead increased it by $1.50. That unpredicted $.50 increase is what lost a lot of business profits, but the $3 increase to all employees is still the increase that raised our food prices by a much greater degree. Does that make sense or am I being too simple?

  8. dad29

    Back in the Good Old Days (’70’s) one doubled the actual cost of food to obtain retail price. That is, if the hamburger, cheese, and bun actually cost the restaurant $2.45, the selling price would be $4.90. The other half was supposed to cover labor, rent, utilities, franchise costs, equipment lease-costs, insurance, general business expense, taxes, and profit. So yes, a jump in labor price DOES have a serious effect on selling price (or on profit.)

    I haven’t seen an RMA lending guide book for three decades. (Morris printed a compendium of bank lending statistics showing what were ‘lendable’ P&L statements for damn near every SIC code. Very useful!!) Things may have changed since the ’70’s, but not by too much.

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