The following report is from Forbes:
Until a few days ago there were McDonald’s units in more than 800 Walmart stores. After additional closing in Walmart stores this summer, there will be about 150 units left. At the same time, franchisees of Subway stores are also closing their stores this year.
What happened?
1. There is less foot traffic in Walmart stores today and these chains need the traffic to have a profitable performance.
2. Many Walmart customers are picking up their goods in parking lots since the pandemic started. It means that fewer people stop for fast-food.
3. Some customers are not even coming to the store since they order from home. They receive delivery without coming to the store.
4. McDonald’s operations in Walmart are less profitable than their regular units, since they do not have a drive-through window according to Sarah Nassauer of the Wall Street Journal.
5. McDonald’s started to close hundreds of their own free-standing stores since 2002. In 2020 there were about 500 McDonald’s stores in operation in Walmart stores.
6. Some stores have suffered loss of sales volume when another restaurant opened in the same store. Walmart is testing smoothie vending machines, Charley Phyllis Steak restaurants, Domino Pizza locations, Ben’s soft pretzels and many other fast-food concepts.
It is likely that the food locations will be operated by other companies. The Wall Street Journal suggests that Walmart is testing Yum Brand’s Taco Bell and that Domino Pizza franchises will be expanded.
Read more about it here:
AUTHOR COMMENTARY
I am mentioning this report because it demonstrates how much the economic landscape is changing. As a Christian, I would not dare eat McDonald’s; plus, I have not shopped at Walmart for some time anyways. While it could be true that other fast food garbage shops are slightly more profitable than McDonald’s, I think it largely has to do with all the Covid restrictions. We have noted in previous reports that the fast food restaurants saw a jump in sales even after all the indoor closings and other “safety measurements” they were forced to do.
As I am sure you are well aware the malls have been on the decay for years, and the lockdowns will be their final killer. The ones that remained open during the lockdowns and hit with massive restrictions were still deeply hurt because one of the draws of a mall is the food court. So the large franchises are going to cut their losses and the independent shops are finished.
The transition is less traveling and foot traffic, but more delivery and convenience.
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