One of the greatest conveniences about stopping by Walmart is that there’s so much you can accomplish in one stop. But in the coming months, there’s one specific part of the shopping experience you might not be able to count on anymore. That’s because the company has announced it will be closing hundreds of McDonald’s restaurants that operate inside Walmarts nationwide, The Wall Street Journal first reported. Read on to see why the nation’s largest retailer is cooling down its relationship with the Golden Arches, and for more on companies that are downsizing, check out This Beloved Store Is Closing 65 Locations.
Walmart is winding down its partnership with McDonald’s by closing hundreds of restaurants in the coming months.
As a result of changing shopping habits, Walmart has confirmed that it plans to close hundreds of McDonald’s locations, ultimately leaving only about 150 restaurants remaining after the list of closures is finalized over the summer. The decision marks the end of a nearly three-decade-long collaboration that saw over 1,000 McDonald’s restaurants operating within Walmarts at its height, which had already dropped to just about 500 at the start of 2020.
“These spaces have been freeing up over time. We have been and continue to fill them,” Molly Blakeman, a Walmart spokesperson, said in a statement to USA Today. “We’re looking to both restaurants and services that are really relevant to our customers.”
And for more on what to avoid at the superstore, check out The 20 Worst Things to Buy at Walmart, According to Experts.
Pandemic-related shopping changes have sped up the closings.
The major move marks yet another change brought on by the effects of the COVID-19 pandemic, as a sharp increase in online sales, pickup orders, and home deliveries caused foot traffic in stores to plummet. Walmart reported that 2020 saw a 79 percent increase in e-commerce sales from the previous year.
But a combination of changing customer preferences and local health ordinances also made it difficult for many McDonald’s locations within Walmarts to operate. In July, Kevin Ozan, McDonald’s chief financial officer, announced that more than half of the 200 locations that had shuttered in 2020 were “low-volume restaurants in Walmart store locations,” USA Today reports. And for more retailers who are shuttering locations, check out This Iconic Clothing Company Is About to Close 100 Stores.
A lack of drive-through windows hurt the locations’ margins in a big way.
Even before the pandemic, there were signs that the partnership’s days were numbered. According to The Wall Street Journal, drive-through windows are the biggest source of profitability for McDonald’s locations, meaning the in-store restaurants were already at a major disadvantage.
Other McDonald’s executives point out that customers would often take advantage of refills and extra condiments while shopping, which also ate away at the locations’ bottom lines. And the fast food chain reports that business had begun to dip even before the pandemic took hold, with one-third of all sales at company locations coming from Walmart employees eating during breaks or at the end of shifts, The Wall Street Journal reports.
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New restaurants and businesses will replace the shuttered fast food locations.
Just because the Golden Arches are coming down doesn’t mean the former dining spaces in Walmarts will sit empty. Walmart says that other fast-food operators such as Domino’s and Taco Bell have already begun to open locations within SuperCenters, with other local businesses such as barbershops and tool rental facilities also taking on leases.
“We have a great opportunity with our leased-space business to help our stores become even more convenient and relevant to local communities,” Blakeman told USA Today. “We are excited to continue to bring in new businesses that make sense for our customers and their changing needs.” And for more on companies struggling with pandemic pressures, check out These 3 Beloved Clothing Brands Just Filed for Bankruptcy.