After 40 years, the world’s largest hamburger chain, McDonald’s, is slimming down. In 2015, the chain plans to close more restaurants than it will add in the US. Every year it does shut down under-performing restaurants, but this is the first time in 40 years that the number of restaurants will decline in the US. While that’s a sea-change from the past, it’s not much cause for worry since the $27-billion chain has over 14,300 stores of its 36,000 restaurants globally in the US—more than double of immediate competitor Burger King, but less than sandwich chain Subway. In 2104, McDonald’s also saw revenues fall 2.37% and net income down 15% over 2013. One reason is the intense competition from newer entrants like Shake Shack and Five Guys that have introduced the concept of ‘better burgers’, and Chipotle where consumers think the food is fresher.
The company’s global comparison sales report for May 2015 shows sales increased 2.3% in Europe but declined 0.2% in the US and 3.2% in the Asia-Pacific. Middle East and Africa. The reduction in the number of US stores is not going to slow down its global expansion. It plans to add over 300 restaurants globally in 2015. India is one market where there has been a sharp increase in the number of restaurants. At the end of 2014, it had 366 restaurants, more than double the 179 it had in 2009. What remains to be seen is whether this strategy could lead to the beginning of the end of the iconic Golden Arches.