McDonald's to shrink in US, 1st time in decades

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NEW YORK (AP) -- The burger chain that put "supersize" into the American vernacular is slimming down: For the first time in more than 40 years, and perhaps ever, McDonald's says the number of U.S. restaurants it has is shrinking.

McDonald's plans to close more restaurants in the U.S. than it opens this year, according to the world's biggest hamburger chain. That hasn't happened since at least 1970, according to an Associated Press review of McDonald's regulatory filings.

Becca Hary, a McDonald's spokeswoman, declined to provide a specific figure but said the reduction would be "minimal" compared with its total of about 14,300 U.S. locations.

Still, the contraction is symbolic of troubles under the Golden Arches and how it's trying to regroup.

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McDonald's to shrink in US, 1st time in decades
SAN FRANCISCO, CA - APRIL 22: Signs are posted on the exterior of a McDonald's restaurant on April 22, 2015 in San Francisco, California. McDonald's reported a decline in first quarter revenues with a profit of $811.5 million, or 84 cents a share compared to $1.2 billion, or $1.21 a share, one year ago. (Photo by Justin Sullivan/Getty Images)
A McDonald's sign is displayed at a McDonald's restaurant in East Palo Alto, Calif., Friday, April 20, 2012. McDonald's mix of old menu standbys and new items like Chicken McBites lured in more diners, who helped boost its first-quarter profit. The world's biggest hamburger chain said Friday that its net income rose 5 percent in the first quarter, in line with Wall Street expectations. (AP Photo/Paul Sakuma)
A McDonald's restaurant sign advertises to Chicago Cubs fans across the street from Wrigley Field in Chicago, Monday, April 20, 2009. McDonald's Corp. said Wednesday that its first-quarter profit climbed nearly 4 percent as more customers worldwide came to the Golden Arches for a cheap meal. (AP Photo/Charles Rex Arbogast)
Businesses all over the Coal River valley, like this one on a McDonald's in Beckley, W.Va. on Sunday, April 11, 2010, still have signs carrying remembrances of the 29 miners died in the explosion at Massey Energy Co.'s Upper Big Branch mine in nearby Montcoal, W. Va. on Monday. (AP Photo/Amy Sancetta)
FILE - In this Thursday, July 31, 2014 file photo, a customer walks past a statue of Ronald McDonald on display outside a McDonald's restaurant in Beijing. McDonald's Corp. on Monday, Nov. 10, 2014 said that a key global sales figure slipped 0.5 percent in October, with weakness in the U.S. and ongoing difficulties from a food-safety scandal in China weighing down its business. (AP Photo/Andy Wong, File)
Pedestrians walk past a McDonald's fast-food restaurant in Tokyo on January 9, 2015. A Japanese woman discovered fragments of 'dental material' in a McDonald's burger in 2014, the food chain said on January 9, the latest in a series of food contamination woes for the fast-food giant. AFP PHOTO / Yoshikazu TSUNO (Photo credit should read YOSHIKAZU TSUNO/AFP/Getty Images)
NOVATO, CA - DECEMBER 08: In this photo illustration, a McDonald's cheeseburger and fries are displayed on a table at a McDonald's restaurant on December 8, 2014 in Novato, California. McDonald's reported a worse than expected decline in November global same-restaurant sales. (Photo Illustration by Justin Sullivan/Getty Images)
A McDonald's restaurant in New York's Times Square features a movie theatre-style marquis, Thursday, Sept. 5, 2014. (AP Photo/Mark Lennihan)
SEATTLE, WA - SEPTEMBER 04: McDonald's shows fans that tailgating is an anytime, anywhere experience at the NFL season opener kickoff party on September 4, 2014 in Seattle, Washington. (Photo by Suzi Pratt/Getty Images for McDonald's)
NEW YORK, NY - JUNE 09: A McDonald's is seen on June 9, 2014 in New York City. McDonald's domestic sales rose slightly in May, but remain weak overall. (Photo by Andrew Burton/Getty Images)
STAMFORD, CT - APRIL 08: Activists protest for higher wages outside a McDonald's restaurant on April 8, 2014 in Stamford, Connecticut. Demonstrations were organized across the state by Connecticut Working Families to bring attention to minumum wages paid by fast food chains and Wal-Mart stores. (Photo by John Moore/Getty Images)
A customer walks away with her takeout meal at a McDonald's restaurant in south Los Angeles where fast-food workers and their supporters gathered to protest wage theft on April 3, 2014 in California. Fast-food workers were joined by elected officials, community allies and faith leaders to protest systemic and illegal labor abuses in the fast food industry, coming just days after a first-ever national poll of fast-food workers found that 89 percent of employees surveyed at companies like McDonalds, Burger King and Wendys reported having wages stolen from them. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
A picture taken on January 22, 2014 in Paris, shows the logo of a US fast food restaurant Mac Donald's. Vice-president for finance of McDonald's France Alexis Bourdon reiterated in a statement to the press on January 22, 2014 that the American fast-food giant, suspected of trying to avoid paying taxes on 2.2 billion euros ($3 billion) of income from its 314 French eateries, 'pays all of its taxes' on the 'totality of its revenue', denying a report of French magazine L'Express. AFP PHOTO / KENZO TRIBOUILLARD (Photo credit should read KENZO TRIBOUILLARD/AFP/Getty Images)
FILE - In this April 2, 2014 file photo, a man talks on a mobile phone next to a downtown McDonald's in Hong Kong. McDonald's global sales at established restaurants grew 0.9 percent for the world’s largest hamburger chain, the company said Monday, June 9, 2014. A 2.5 percent increase in sales in its Asia, Middle East and Africa region was driven by strength in China and other Asian markets. (AP Photo/Vincent Yu, File)
FILE - In this Friday, Oct. 4, 2013, file photo, a McDonald's restaurant sign is seen at a McDonald's restaurant in Chicago. McDonald's Corp. has shut down a website, Thursday, Dec. 26, 2013, intended to provide employees with work and life guidance after it generated negative publicity for the fast-food company. (AP Photo/Nam Y. Huh, File)
In this Tuesday, Jan. 21, 2014, photo, a McDonald's Big Mac sandwich is photographed at a McDonald's restaurant in Robinson Township, Pa. McDonald's saw a key sales figure drop in the U.S. again in February 2014, as the world's biggest hamburger chain struggles to beat back competition and adapt to changing eating habits. (AP Photo/Gene J. Puskar)
In this July 11, 2013 photo, a McDonald's marquis is illuminated in New York's Times Square. (AP Photo/Mark Lennihan)
In this Tuesday, Jan. 21, 2014, photo, cars drive past the McDonald's Golden Arches logo at a McDonald's restaurant in Robinson Township, Pa. McDonald's reports quarterly earnings on Thursday, Jan. 23, 2014. (AP Photo/Gene J. Puskar)
In this May 6, 2012, photo, people walk around a McDonald's restaurant in New York's Time Square. McDonald's Corp. said Tuesday, May 8, that a key revenue figure rose in April as strength in the U.S. and U.K. helped offset weakness in Japan. But results missed analyst expectations and McDonald's shares fell 2 percent in premarket trading. The world's largest hamburger chain says global sales rose 3.3 percent at stores open at least 13 months. (AP Photo/CX Matiash)
In this Tuesday July 31, 2012 photo, Olympic athletes queue up at the McDonalds inside the dining hall at the Olympic Village in London. The athletes' dining room in the Olympic village is a food court like no other, offering the world's elite athletes healthy, hearty food and fuel, 24 hours a day _ and doing it the Slow Food way. And yet, off in the back corner of the dining room, next to the coffee bar that's disproportionately populated by Italians queuing up for their morning espresso, lurks McDonald's and its Sausage & Egg McMuffins. (AP Photo/Bullit Marquez)
In this photo taken Friday, Sept. 7, 2012, the new McDonald's television channel is seen at a McDonald's restaurant in Norwalk, Calif. McDonald’s is testing its own TV channel in 700 California restaurants in a pilot project that could expand to all the company’s restaurants. (AP Photo/Damian Dovarganes)
FILE- In this Wednesday, Sept. 12, 2012, file photo, Carlos Gonzalez and Elsa Guzman eat breakfast at a McDonald's restaurant, in New York. McDonald'€™s understands its reputation for serving cheap, greasy fare is a growing liability and is trying to change in a variety of ways. (AP Photo/Mark Lenniha, File)
In this photo taken on Friday, Sept. 7, 2012, McDonald's patrons watch the new McDonald's television channel at a McDonald's restaurant in Norwalk, Calif. McDonald’s is testing its own TV channel in 700 California restaurants in a pilot project that could expand to all the company’s restaurants. (AP Photo/Damian Dovarganes)
FILE- This May 2, 2012, file photo shows a sign advertising job openings outside a McDonalds restaurant in Chesterland, Ohio. The Labor Department said Tuesday, May 8, that U.S. companies in March posted the highest number of job openings in nearly four years, a sign that hiring could strengthen in the coming months after slowing this spring. (AP Photo/Amy Sancetta, File)
In this photo taken Monday, April 30, 2012, three women walk past an advert for McDonald's fast food restaurant products in London. British doctors have slammed the sponsorship of the London Olympics by companies like McDonalds, saying it sends the wrong message amid the country's ballooning obesity crisis. Big Macs, fries and milkshakes will be part of McDonald's exclusive "meal brand" of the Olympics and the fast-food giant will soon be opening its largest franchise in the world, a two-storey cathedral-like restaurant that seats 1,500 customers, at London's Olympic Park. (AP Photo/Alastair Grant)
FILE - In this Friday, April 20, 2012, file photo, a McDonald's sign is shown at a McDonald's restaurant in East Palo Alto, Calif. McDonald's Corp., on Wednesday, Sept. 4, 2013, announced that a revamped version of its Dollar Menu that includes items priced at $5 could be launched nationally this year. (AP Photo/Paul Sakuma, File)
In this Jan. 20, 2012 photo, the McDonald's logo is displayed on a drink as customers purchase lunch at McDonald's, in Springfield, Ill. McDonald’s Corp. saw net income jump by 11 percent in the fourth quarter, as the fast-food giant continued to attract budget-conscious customers with low prices. (AP Photo/Seth Perlman)
FILE - This Oct. 17, 2011 file photo, cars move through the drive-thru window at a McDonald's in Springfield, Ill. McDonald's Corp. on Tuesday, July 29, 2014 said it has been notified by the National Labor Relations Board that it can be named a “joint employer” for workers in its franchisee-owned restaurants. (AP Photo/Seth Perlman, File)
In this Jan. 20, 2012 photo, the McDonald's logo and a Happy Meal box with french fries and a drink are posed at McDonald's, in Springfield, Ill. McDonald’s Corp. saw net income jump by 11 percent in the fourth quarter, as the fast-food giant continued to attract budget-conscious customers with low prices. (AP Photo/Seth Perlman)
This June 28, 2011 photo shows a sign pointing to the McDonald's restaurant near the historic Pantheon in Rome, Italy. McDonald's Corp.'s revenue at restaurants open at least 13 months climbed 3.5 percent in August, led by strength in the U.S. and Europe. But the performance missed Wall Street's expectations and its stock fell in premarket trading. (AP Photo/Amy Sancetta)
In this July 18, 2011 photo, a Mocha Frappe is shown at a McDonald's restaurant in Boston. McDonald's Corp. said Friday, July, 22, its net income rose 15 percent in the second quarter to $1.4 billion on rising sales around the world. (AP Photo/Charles Krupa)
Rosaland Hemphill, 48, of Atlanta, fills out a job application at an Atlanta McDonald's restaurant Tuesday, April 19, 2011. McDonald's hopes to hire 50,000 new workers nationwide on April 19, 2011. (AP Photo/John Bazemore)
This Oct. 28, 2010 photo shows a McDonalds restaurant in Champaign, Ill. advertising Egg McMuffins. McDonalds became a huge egg buyer when it added the sandwich to its menu in the 1970s and now has plans to add oatmeal. Farmers can see big sales when a restaurant chain adds the crops and food they grow it its menu. (AP Photo/David Mercer).
In this Sept. 9, 2010 photo, a McDonald's sign is shown in Portland, Ore. McDonald's frappes, smoothies and dollar menu drew in more customers in the third quarter, pushing the world's largest burger chain's net income up 10 percent Thursday, Oct. 21, 2010. AP Photo/Don Ryan)
FILE - In this July 21, 2010 file photo, people make their way past the McDonald's restaurant at Fisherman's Wharf in San Francisco. McDonald's Corp. posted its biggest monthly increase of a key U.S. sales figure in two years on Monday, Aug. 9, 2010, saying its new fruit smoothies and frappes were a hit with customers during a hot and steamy July. (AP Photo/Eric Risberg, file)
The McDonald's logo is seen on a interstate exit ramp sign near Springfield, Ill., Tuesday, July 19, 2010. (AP Photo/Seth Perlman)
A patron leaves a McDonald's restaurant in Tonawanda, N.Y., Wednesday, July 21, 2010. (AP Photo/David Duprey)
FILE - In this Jan. 22, 2010 file photo, a customer grabs lunch at a McDonalds drive-through in Chicago. McDonald's said Tuesday, March 8, 2011, global growth helped revenue in locations open at least 13 months rise 3.9 percent in February.(AP Photo/M. Spencer Green, File)
FILE - In this Jan. 20, 2010 file photo, a McDonald's restaurant is shown in Doral, Fla. McDonald's Corp. Sales of McDonald's fruit and maple oatmeal and drinks like frozen strawberry lemonade pushed the fast-food chain's revenue at restaurants open at least 13 months up 3.1 percent in May. (AP Photo/Wilfredo Lee, file)
In this Nov. 4, 2009 photo, customers visit a new McDonald's featuring free wifi, a euro-themed design and art deco in New York. The restaurant is a first-of-its-kind in the nation for McDonald's.(AP Photo/Bebeto Matthews)
In this Nov. 4, 2009 photo, customers visit a new McDonald's featuring free wifi, a euro-themed design and art deco in New York. The restaurant is a first-of-its-kind in the nation for McDonald's. (AP Photo/Bebeto Matthews)
In this photo made on Wednesday, Oct. 14, 2009, the trademark golden arches logos are seen at a McDonald's restaurant in Pittsburgh. McDonald's Corp. said Thursday, Oct. 22, 2009, new, more expensive burgers helped its third-quarter profit climb almost 6 percent. (AP Photo/Keith Srakocic)
A cheeseburger and fries meal from a McDonald's restaurant is seen in San Jose, Calif., Wednesday, July 22, 2009. McDonald's said Thursday, its second-quarter profit dipped 8 percent because of the stronger dollar and a gain that boosted results a year ago.(AP Photo/Marcio Jose Sanchez)
A United States flag flies in front of a McDonald's restaurant sign in San Jose, Calif., Wednesday, July 22, 2009.(AP Photo/Marcio Jose Sanchez)
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The company enjoyed rapid expansion for much of its history by offering consistent food at affordable prices. It even thrived during the recession, when its Dollar Menu drew in people trying to save money and new products like McCafe coffee drove up sales.

But since then, chains like Chipotle that market themselves as serving better food and ingredients have chipped away at McDonald's dominance. A new breed of "better burger" chains such as Five Guys Burgers and Fries is taking away customers, too.

McDonald's past success led to "a natural overconfidence," said John Gordon, a restaurant industry analyst with Pacific Management Consulting Group.

"McDonald's is such an internally focused organization, it's a situation where you don't have a fresh perspective coming in," Gordon said.

McDonald's executives have also conceded that an overly complicated menu led to inaccurate orders and longer wait times, and that they failed to keep pace with changing tastes.

CUTTING THE FAT

In April, McDonald's said it would close about 700 underperforming locations around the world this year, including in the U.S. CEO Steve Easterbrook, who stepped into the role on March 1, also later laid out plans to restructure the company to remove layers of bureaucracy and move more nimbly.

In any given year, some underperforming McDonald's restaurants will close. But previously, the number of closings has been outweighed by new restaurants that open.

The U.S. store closings will be a mix of franchised and company-owned locations, Hary said. She noted that the closings are part of a strategic review intended to set the stage for the future growth. The company did not provide a list of locations expected to close.

McDonald's Corp. has not reported an annual reduction in U.S. locations since at least 1970, according to archived filings with the Securities and Exchange Commission. For 1969, McDonald's did not include a U.S. store count in its annual report.

The company declined to comment on the last time it reduced its U.S. store base. But given the rapid expansion that characterized its early years, it's likely McDonald's hadn't pulled back since Ray Kroc founded the company in 1955.

SATURATION POINT OR ROOM TO RUN?

Closing weak stores isn't unusual for companies trying to turn around their fortunes. Starbucks CEO Howard Schultz shuttered hundreds of U.S. cafes after returning to head the company in 2008. Since then, the coffee chain has enjoyed healthy sales growth and expanded its footprint.

Mike Donahue, who served as McDonald's chief communications officer before leaving in 2006, said McDonald's hasn't necessarily reached its limit in the U.S.

"The only thing that stops growth is relevancy to the customer," said Donahue, who has since co-founded Lyfe Kitchen, a chain that positions itself as serving more wholesome food.

Even though it's closing locations, McDonald's easily remains the country's biggest hamburger chain. It still has more than twice as many restaurants as No. 2 Burger King, according to the industry tracker Technomic.

Among all fast-food chains, Subway has the most locations in the country with about 27,000 stores, though they do far less business than the typical McDonald's.

And McDonald's is still growing globally. It plans to add about 300 restaurants to its worldwide total of more than 36,000.

Donahue said that people were saying decades ago that McDonald's had reached its saturation point in the U.S. But within the company, he said there was always confidence that there was room to expand.

Even when McDonald's closed underperforming stores in the past, he said it would open new restaurants in better locations. The closings this year appear to be a way to strengthen its base of stores, he said.

"What they're doing is pruning the tree," he said.

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