McDonald's to close 175 outlets - Brief Article

Eurofood, Nov 21, 2002

Following its recent dip in profits, fastfood giant McDonald's has announced restaurant closures and job cuts as it looks to get back on track.

The US firm said it would close some 175 restaurants, cut up to 600 corporate jobs and withdraw from three countries in an attempt to clip its rising costs.

Another measure will see the firm stop owning properties in four other countries.

McDonald's has been grappling with tough conditions, which include poor sales at home in the US, as well as the mad cow disease scares in Europe and Japan.

However, the restaurant closures are more likely to occur in Latin America and the Middle East. In Brazil and Argentina, falling currency values have hit McDonald's hard.

Attempts at home to stimulate sales by cutting product prices only served to intensify the already ruthless competition, with rival chains Burger King and Wendy's also cutting prices.

EXPANSION TO CONTINUE IN CHINA

However, in stark contrast to the closures elsewhere, expansion in China is to continue unabated. McDonald's plans to open 100 new restaurants each year in China.

Although the company is shutting branches and cutting jobs in other parts of the world, it still sees China as a major growth market.

From 184 stores in mainland China five years ago, there are now over 500 outlets selling burgers, shakes and fries to one of the world's fastest growing economies of over 1.2 billion people.

However, competition is fierce with KFC's Colonel Sanders, which also runs several hundreds of outlets in China.

McDonald's recently announced that it would close 175 branches and slash 40 to 600 jobs worldwide on falling sales.