McDonald's Closing Hundreds of Stores in US, Asia After Losses

McDonald's announced Wednesday that it is closing hundreds of restaurants around the world – half of those in the United States, China and Japan – as the fast food giant tries to rebound from financial losses sustained around the globe.

The fast food chain is targeting 700 poor performing restaurants for closing this year, according to a McDonald's news release in which it reported losses not only in the United States, but in Europe and Asian as well.

First quarter comparable sales in the United States decreased 2.6 percent and operating income for the quarter fell by 11 percent, according to the company. First quarter comparable sales in Europe declined 0.6 percent while operating income tumbled 20 percent.

"APMEA's first quarter comparable sales decreased 8.3 percent primarily due to the impact of prolonged, broad-based consumer perception issues in Japan, along with negative but improving performance in China," said McDonald's about its Asia market. "For the quarter, APMEA's operating income declined 80 percent … due to strategic restaurant closings and other charges and negative operating performance in Japan and China."

Bloomberg Business reported that McDonald's Holding Co. in Japan would likely lose $318 million this year and sales were expected to drop 10 percent. Along with the store closing in Japan, the company had hoped to revamp 2,000 others over the next several years.

McDonald's Holding president Sarah Casanova said she would take a 20 percent pay cut over the next six months and other directors would take 15 percent salary cuts in the transition as 100 jobs would be lost in Japan.

Time magazine reported that while the 700 store closings is a small percentage of the roughly 32,500 restaurants McDonalds operates globally, it shows that the fast food king is serious about aggressively taking steps about turning around its fortunes and staying No. 1.

"As the world's leading restaurant company, we are evolving to be more responsive to today's customer," said Steve Easterbrook, McDonald's president, adding that more information will be shared about the restaurants turnaround plans on May 4.

"McDonald's management team is keenly focused on acting more quickly to better address today's consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth," said Easterbrook

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