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McDonald’s CEO has warned employees to expect job cuts as part of a massive revamp that will also speed plans for additional sites.
Its CEO, Chris Kempczinski, stated that the fast food company was harmed by an “outdated and self-limiting” structure.
In a message to staff worldwide, the business said it would examine corporate workforce levels by April.
McDonald’s employs roughly 200,000 people in corporate employment and its owned restaurants, with 75% situated outside of the United States.
Its CEO also announced that certain programs would be canceled outright.
The company did not explain the scope of the proposed job reduction or which projects would be affected.
However, in an interview with the Wall Street Journal, Mr. Kempczinski claimed he did not have a specific number of cuts.
Pandemic escalation
Mr. Kempczinski stated that as part of the new strategy, the company intends to add more facilities “to properly exploit the increased demand we’ve driven over the last few years.”
Despite the fact that dining, in general, declined during the outbreak, McDonald’s benefited from the company’s efforts in online ordering and home delivery.
McDonald’s sales increased 6% in the first nine months of the year, aided by price hikes on goods such as cheeseburgers.
However, the strengthening of the currency and the retreat from Ukraine have hampered its international profitability.
In its most recent investor report, issued in October, the firm noted that rising expenses were also causing problems, noting that there was “growing uncertainty and unease about the economic environment” at several of its franchised locations.
The Chicago-based firm has a global presence in over 160 countries.
It said earlier this week that it would withdraw from Kazakhstan, which borders Russia, citing supply chain problems created by the Ukrainian war.
McDonald’s said in May that it would leave Russia after 32 years of operation, the latest shift in the restaurant industry.
The US economy added more jobs in December
Even as the economy wrestled with the effects of quickly rising prices, employment growth in the United States remained strong last month.
Employers added 223,000 jobs in December, lowering the unemployment rate to 3.5% from 3.6% in November.
The labor market’s resilience has increased optimism that the world’s largest economy would avoid a catastrophic economic crisis this year.
The Federal Reserve of the United States is raising borrowing costs in order to calm the economy and reduce pricing pressures.
As businesses battle with the impact of rising interest rates and the possibility of decreased consumer spending, recent stories of big job cuts at banks and digital companies such as Amazon have sparked the public’s interest.
However, the US Labor Department’s monthly data showed that nearly every sector of the economy was adding jobs, with bars and restaurants, healthcare businesses, and construction firms leading the way.
Though job losses are increasing, particularly in the technology sector, they remained near historic lows last year, according to Andrew Challenger, senior vice president at Challenger, Gray & Christmas, who has followed such announcements since the 1990s.
The US economy slowed substantially when the pandemic reopened in 2021.
Higher borrowing costs are harming the housing and banking industries while rising prices are straining household budgets, raising fears about consumer spending – the greatest generator of the US economy.
According to the most recent survey, prices in the United States jumped 7.1% from a year ago, well beyond the 2% rate considered healthy.
According to analysts, the job market’s resilience creates uncertainty because the Federal Reserve may need to keep hiking interest rates to keep inflation under control.
According to the Labor Department, average hourly salaries climbed by 4.6% in December compared to the previous year. This was a slower rate than in November, which analysts regarded as a good sign for the fight against inflation.
However, it was mixed news for workers, who have yet to see salary rises to keep up with inflation.
Trouble to come?
Most individuals believe the economy will slow down in the coming months as consumers spend less as prices rise. However, once the Federal Reserve of the United States quickly hiked interest rates last year, businesses faced higher borrowing costs.
So, should people be concerned about employment losses in the tech industry?
Many of the tech CEOs who made the announcements claimed that it was because they hired too many people during the pandemic, when more things moved online and business surged.
Higher loan rates and a severe decline in the US stock market have made it difficult for smaller enterprises to obtain financing.
Furthermore, the significant losses suffered by certain enterprises as a result of the cryptocurrency market’s collapse have not helped.
Read Also: Job cuts in tech might be a warning for the future
According to Joe Brusuelas, chief economist at the consulting firm RSM, the wave of IT job layoffs was a “necessary and expected” change following a decade of high expansion, fueled partly by low lending rates and ended with the global crisis.
He stated that IT firms will no longer be immune to economic upheavals, such as the projected slowdowns in Europe and the United Kingdom this year.
However, he stated that job cuts should not be “over-interpreted” because many impacted workers, at least in the United States, appear to find new jobs swiftly.
Only 5,000 jobs were lost in the information sector, which includes much of the computer industry, from November to December. The recent Labor Department jobs report reflected this. So, despite thousands of job layoffs reported in recent months, employment is higher from a year earlier.
