As fast-food restaurants with drive-throughs have gained popularity, those without have waned.
Now, McDonald’s is planning to close hundreds of its eateries in Walmart stores by the end of the summer, the Wall Street Journal reports.
That will leave just 150 of the Golden Arches’ Walmart locations across the country — down from 500 at the start of 2020 and a peak of roughly 1,000.
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The two chains began working together in 1994, but in recent years their strategies have diverged. McDonald’s began closing stores in 2002 to focus on its product and image. And Walmart began renovating its stores, leaving the McDonald’s looking dated.
The McDonald’s locations within Walmart are not as profitable as those with drive-throughs, and Walmart employees account for about about a third of its sales inside stores, according to the publication.
As Walmart shoppers increasingly began to pick up their purchases outdoors during the pandemic, foot traffic fell, hurting McDonald’s sales. Subway franchises are also planning to close their Walmart locations.
For Walmart, that means less revenue from leasing restaurant space. The company is reportedly pivoting its strategy to more to-go meals and finding smaller chains that appeal to local customers.
McDonald’s has been otherwise somewhat insulated from the effects of the pandemic, as the chain owned 55 percent of the land underneath its restaurants at the end of 2019. So if a franchise were to fail, McDonald’s could line up a new tenant or sell the land.
[WSJ] — Danielle Balbi