The company today said it is cutting 400 to 600 worldwide positions, with at least half from the U.S. It didn't identify what departments or units would be affected, but already several high-level executives reportedly have left the marketing department.
175 units to close
The burger chain also will shutter 175 poorly performing units in 10 countries and exit seven countries in the Middle East and Latin America. McDonald's is retreating entirely from three countries and transferring ownership to developmental licensees in four others, from where it will now receive royalty payments.
As a result, McDonald's is
"These actions are the right things to do for McDonald's shareholders, the brand and our business," Chairman-CEO Jack Greenberg said in a statement. "We remain focused on growing our existing restaurants' sales and we're committed to making the changes necessary to succeed in the challenging worldwide economic and competitive environments in which we operate."
Last month, Mr. Greenberg said McDonald's was reviewing its "general and administrative" expenses that would result in job losses. At the time, he said he hoped the cuts wouldn't be significant.
Some observers have already said the cuts didn't go deep enough.
Like-for-like domestic October sales fell by 0.6% and were lower than previously targeted, prompting McDonald's to back off of its earlier earnings targets.
"The fact that McDonald's did not generate flat-to-positive [comparisons] in October given the easy year-on-year comparison and the significantly boosted advertising spend is highly disconcerting," said Mark Kalinowski, restaurant analyst with Salomon Smith Barney.
He lowered his earnings forecasts for the quarter and the year by 2 cents, to 32 cents and $1.40, respectively. He also said more closures "might be prudent," citing franchisee comments that the company should close 1,000 units.