McDonald's is closing hundreds of its stores as it continues to struggle financially. The chain revealed today in its first quarter earnings report that McDonald's plans to slash costs by closing "about 220 under-performing restaurants primarily in the U.S. and China." There are also plans to shutter 130 restaurants in Japan. This is on top of the 350 restaurants the chain already shut down during the quarter.
The earnings report is bleak: The company's global sales dropped by 2.3 percent and there was an 11 percent decrease in total revenues. Bloomberg adds that same store sales fell by 2.6 percent this quarter and net income fell by 33 percent.
However, McDonald's says it has a plan to turns its financial struggles around. The chain's new CEO Steve Easterbrook notes in the report: "We are developing a turnaround plan to improve our performance and deliver enduring profitable growth... We look forward to sharing the initial details of this plan on May 4."
Bloomberg predicts that part of McDonald's grand plan to bounce back focuses heavily on the chain's breakfast menu. Currently, it accounts for about 25 percent of the chain's domestic sales. McDonald's started testing all-day breakfast in 94 stores in San Diego this month, which the chain hopes will give it a leg-up in its breakfast wars with competitors like Taco Bell.
A financial analyst tells Bloomberg that McDonald's may continue to aggressively cut costs in order to turn around their fiscal issues. This means that McDonald's may not increase the wages of its employees more than the recent dollar per hour raise it issued. This is not good news for the chain's workers — many of whom live in poverty and are dependent upon public assistance — who are fighting for a $15 per hour paycheck.