McDonald’s CEO Chris Kempczinski warns he will slash many of its 200,000 corporate staff

McDonald’s CEO Chris Kempczinski has revealed plans to cut corporate jobs later this year to help the business grow.

In a letter to staff on Friday, the fast-food giant’s boss said there would be “difficult discussions and decisions ahead” and warned the company had lost focus.

“We had 70 different, distinct versions of what a crispy chicken sandwich would look like all over the world,” he wrote. ‘I don’t need 70 different permutations of a chicken sandwich.’

McDonald’s employs some 200,000 people worldwide in corporate roles and company-owned restaurants, with about 75 percent of those located outside the US. Kempczinski said the chain will begin layoffs in April 2023. .

The news comes as a slew of major companies, mainly in the technology sector, are announcing mass layoffs amid fears the US will plunge into recession this year.

The Chicago-based hamburger restaurant operates 40,000 restaurants in more than 160 countries with a total of two million employees at its franchised locations. About 13,000 of those places are in the United States.

The CEO also wrote in the letter: “Today, we are divided into silos with a hub, segments, and markets.” The memo was titled Accelerating Arcs 2.0.

He continued: “This approach is outdated and self-limiting: we’re trying to solve the same problems multiple times, we don’t always share ideas, and we can be slow to innovate.”

Kempczinski also required the company to speed up the pace of opening new restaurants to keep up with demand.

In an interview about job cuts with The Wall Street Journal, Kempczinski said: “Some jobs that exist today will move or those jobs may disappear.”

He went on to tell the Journal that the company doesn’t have a set number of jobs that are expected to be laid off or money that needs to be saved.

McDonald’s global growth has stalled due to the rising dollar and the Russian invasion of Ukraine. The company recently announced that it would withdraw from Kazakhstan, which shares a border with Ukraine, due to supply problems created by the war.

Following the invasion, McDonald’s was one of many Western companies that pledged to leave Russia. The restaurant first opened in Moscow 32 years ago, seen as a significant sign of the Cold War thaw.

Kempczinski also wrote in the letter to staff: “While there is much we can be proud of, you have also told us there is more we can do.” We are performing at a high level, but we can do even better.’

On Friday, McDonald’s shares rose 2 percent and the company was expected to post its fourth-quarter earnings on January 31.

In the third quarter of 2022, McDonald’s reported profit of $5.8 billion, down from $6.2 billion in the same period in 2021.

Fast food restaurants generally do well in times of economic gloom, as consumers look to save money.

McDonald’s saw signs of growth in 2022 as prices for basic items increased, the company also adapted to the Covid-19 pandemic by investing in delivery.

At the same time the Kempczinski memo was sent, workers removed the brand from McDonald’s outlets in Kazakhstan’s largest city, Almaty.

“It was one of the best places where I used to spend time with my friends,” local resident Karina, who gave only her first name, told Reuters.

“I doubt any other company can compete with McDonald’s in Kazakhstan right now, as no other fast food chain can replicate the menu that McDonald’s had for the same price.”

Many Kazakh companies 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 for about 80 percent of its menu starting Jan. 16, citing currency fluctuations and increases in material, labor, transportation and energy costs.

The news of the job cuts came as Amazon said on Wednesday it would cut some 18,000 positions. It’s the largest set of layoffs in the Seattle-based company’s history, albeit only a fraction of its global workforce of 1.5 million.

“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 released by the company. “These changes will help us take advantage of our long-term opportunities with a stronger cost structure.”

He said the layoffs will mainly affect the company’s Amazon Stores division, which a spokesperson said encompasses its e-commerce business, as well as the company’s physical stores such as Amazon Fresh and Amazon Go, and its PXT organizations, which run human resources. and other functions.

Meanwhile, Salesforce said it is laying off about 8,000 employees, or 10 percent of its workforce.

The cuts announced Wednesday are by far the biggest 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 for Internet-connected devices, a concept now known as “cloud computing.”

The layoffs are coming on the heels of a reorganization at the top of Salesforce. Benioff’s handpicked co-CEO Bret Taylor, who was also Twitter’s chairman at the time of its devious $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.