McDonald’s Slows Restaurant Revamp Schedule

The fast-food chain announced this week that it would extend the timeline for franchise remodels through 2022.
November 30, 2018

CHICAGO – McDonald’s has slowed the updates to U.S. free-standing stores in order to give franchises through 2022, instead of the previous 2020, Bloomberg/Watertown Daily News reports. Currently, around half of the U.S. locations have been remodeled.

The extension will give franchise owners—who operate more than 90% of the chain’s restaurants worldwide—more time to revamp their stores with self-ordering kiosks, extra drive-thru lanes (some locations only), and new order delivery systems. McDonald’s is kicking in more than half of the remodel cost, but for many franchise owners, even paying 40% is too much.

“This is a response to some of the franchisees’ concerns,” said Mike Halen, a Bloomberg Intelligence analyst. “The franchisees recently met because they’re not happy with their profitability now. To me, this looks like an answer to that.”

“Our growth strategy remains rooted in making positive food changes, offering new restaurant experiences and providing our guests better value,” said spokeswoman Andrea Abate. “The adjustments we are making will allow us to continue on this path and provide greater local operator flexibility.”

McDonald’s CEO Steve Easterbrook has pushed for the remodels, revealing in 2017 the company’s goal to redo nearly 14,000 U.S. units in the “Experience of the Future” design by the end of the decade. “Restaurants have experienced a little longer downtime than we expected, so we’re focused on limiting that in order to minimize the impact on sales and guest counts,” said McDonald’s CFO Kevin Ozan on a recent earnings call. “The sales and guest count recovery period after we complete a project has also been a little inconsistent, so we’ve put processes in place to execute strong grand reopening plans.”

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