Unhappy Meal

McDonald's Corp. (Oak Brook, Ill.) has announced it will close 175 restaurants around the world, exit some markets entirely and eliminate as many as 600 jobs in an effort to cut costs.

Facing heavy competition and customer feedback that says there are service and quality problems, the fast-food giant has said it will turn its focus to improving sales at existing restaurants while shutting poor performers.

The company said it will exit three overseas markets and close stores in about 10 countries. About a third of the job cuts, mostly among administrative staff, will occur in the U.S. It indicated the markets to be abandoned are in the Middle East and Latin America.

Last month, McDonald's announced it would open only about 100 new U.S. stores next year, roughly a third of one percent of the 30,000 units in its chain. By contrast, the company had been increasing the number of new restaurants by 30 percent in recent years. During the mid-90s, McDonald's had been opening more than 1000 restaurants a year. But last year, as part of a previous reorganization, it closed 163 restaurants and cut 700 jobs.

“We remain focused on growing our existing restaurants'sales,” said ceo Jack Greenberg, “and we're committed to making the changes necessary to succeed in the challenging worldwide economic and competitive environments in which we operate.”

McDonald's has reported lower profits in seven of the past eight quarters. “They're losing market share across the board,” said one restaurant analyst. “As the competition has focused more on particular demographics, McDonald's is trying to be everything to everybody and in the process is losing their point of differentiation, even with children.”

“The U.S. has been saturated with McDonald's restaurants since at least 1995, and they've just continued to build more restaurants,” said another.