McDonald’s (MCD) has decided to cut jobs as part of its corporate restructuring efforts which aims to save around $500 million of administrative expenses by the end of 2019. The scope of the reduction is not yet clear but it is expected to make the fast food chain more competitive and help speed up the decision-making process.
McDonald’s has been struggling to hold its place alongside rivals who are offering better price options for their meals. The company’s high prices have alienated many of its customers. The burger giant tried many efforts to boost U.S. sales like restaurant remodels and investments in digital ordering. Its breakfast options and lower-priced menu items managed to increase sales but more needs to be done. The company also made many efforts to appeal to health-conscious customers by including healthy foods in its menu.
The fast food chain’s rivals have achieved stronger same-store sales through cost reductions but McDonald’s same-store sales were driven through menu price increases. The high prices hurt the traffic at its restaurants. Some analysts however believe the traffic trends have improved over the past two months.
The restructuring will help increase efficiency in decision-making
Some believe this decision is a good move and that too many layers of management decreased efficiency in decision making. The restructuring will help the Chicago, Illinois-based company find new ways to increase profitability. The company has already taken steps to improve its food by using fresh burger patties than frozen and also through better cooking methods.
Investors appeared happy with this decision but after a good climb following the news, the stock dipped slightly during mid-day on Friday. Over the past one month, the stock has climbed more than 2%.