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For The First Time in Decades, McDonald's Is Closing More Stores Than It's Opening

Industry watchers say the world's largest fast-food chain is suffering from its association with industrial farming practices and lower-quality ingredients.

by Aaron Cantú
Jun 19 2015, 9:40pm

Photo by Franck Robichon/EPA

McDonald's will close more stores than it will open this year, a circumstance that hasn't happened since the 1970s, according to the Associated Press, which reviewed the company's regulatory fillings.

The company, the world's largest fast food chain, has long boasted of serving billions of people — and supersizing portions. But, industry watchers told VICE News, McDonald's is undergoing an identity crisis as consumers increasingly scrutinize where their food comes from, what ingredients are used, and how much their choices contribute to climate change.

In April the company announced it would close about 700 underperforming restaurants. Around the same time, it announced that it would no longer use chickens raised on antibiotics and that it would eliminate any links to deforestation in its massive global supply chain.

"One of the elements of our turnaround plan focuses on reconnecting with our customers and furthering continuous improvement in food quality and perceptions," Steve Mazeika, McDonald's Supervisor of Global External Communications, told VICE News.

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To Patty Lovera, Executive Director of Food and Water Watch, it's no coincidence that the eco-friendly announcements came at the same time the company is rethinking its business plan.

"They want to get the good PR out on how they source their major products," she told VICE News, "I think there's a growing awareness about food and food production and why it matters."

You can thank millennials and younger consumers for that growing awareness, says Darren Tristano, Executive Vice President of Technomic, a food industry research firm.

"Millennials and Generation Z are looking for greater transparency of corporate social responsibility," he told VICE News. "They're looking for companies that do business with the environment at the top of their mind."

Conservationist and public health groups have hammered the old guard of fast food restaurants over their reliance on industrial farming techniques and lower quality ingredients. Over the years, chains like McDonald's have lost ground to so-called fast casual restaurants like Chipotle, which touts its use of antibiotic-free and organic ingredients. Tristano said this is partially a result of how forcefully Chipotle has marketed its perceived freshness as an alternative to McDonald's, which once invested in the burrito chain.

"Not only has [Chipotle] done a lot, but they have taken a lot of credit [for their ingredients]. They tout the fact environmentalism is important to them. They have elevated the mindsets of consumers," he said, adding that while food flavor and price were still the most important variables for consumers, "transparency is increasing in its relative importance."

In the past, McDonald's made changes to its menu in response to criticism. It cut its supersize option after the movie Supersize Me incited widespread condemnation of excess portions. It also launched its "Premium" menu in the mid-2000s to appeal to health conscious consumers, and began serving low fat milk or water, rather than soda, as the default beverage for Happy Meals.

Those changes are easy to see. It's harder to discern whether the paper wrapped around a Big Mac came from a tree fallen in an endangered forest, or if your McNuggets came from chickens that weren't fed antibiotics. That means customers will have to take McDonald's word for it — which will also mean trusting that the company can rid its massive supply chain of unsavory practices.

Related: Unhappy Meal: How McDonald's is using Luxembourg's tax laws to supersize its profits in Europe

McDonald's says it will implement its antibiotics policy "within the next two years," and spokesman Steve Mazeika said the company will develop "specific time-bound sourcing targets" for its deforestation policy this year.

But Tristano speculated that the actual changes could take longer, considering the enormous scale of its operations. McDonald's is the second largest buyer of chickens in the country, behind KFC, for example.

With the announcement, McDonald's "gave the public a sense of direction of where their brand is going," Tristiano said, but it will also "take time for the supply chain to get there. The suppliers they're using are going to have to adapt, or they have to find new suppliers."

The shift to suppliers who comply with McDonald's new deforestation policy, which says the company will avoid loggers that clear high-value, primary forests and carbon-rich peatlands, will also take time. This year, the Union of Concerned Scientists gave McDonald's a score of 24.4 out of 100 for its commitment to use deforestation-free palm oil. As poor as that score is, it's still one of the highest among a number of other fast food chains.

"To remove deforestation from its supply chain, McDonald's must also put earlier time-bound goals on all stages of the pledge, from those for individual commodity commitments to the company's overall global supply chains," said UCS in a statement.

While McDonald's has yet to release specific plans for its now antibiotic and deforestation policies, Michael Jacobson, Executive Director of Science in the Public Interest, said the long-maligned company deserved praise for the proposed changes.

"There's a time for churlishness, but when a company does something good, they deserve recognition," he told VICE News.

Still, says Patty Lovera, consumers should be wary of "getting lost in who has the shiniest PR campaign." At least when it comes to antibiotics, she said she would prefer to see regulatory changes.

"What exactly does it mean they'll reduce antibiotics, and how do we know two years from now they'll change policies?" she asked. "So we struggle with the corporate driven change. Ultimately, regulatory change needs to happen."

Munchies: This dude successfully paid for his fast food with bong rips

Follow Aaron Cantú on Twitter: @aaronmiguel_

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