McDonald's CEO warns of possible 2023 layoffs as chain leans into fast service, innovation, and operational efficiencies

• Despite a strong year, McDonald's CEO said the chain may have layoffs this spring.
• His 2023 plan calls for the fast-food giant to move faster, grow units, and push innovation.

McDonald's CEO Chris Kempczinski warned staff Friday of possible layoffs in the spring as part of a plan to move faster, lean into operational efficiencies, and push innovation.

"We will evaluate roles and staffing levels in parts of the organization and there will be difficult discussions and decisions ahead," Kempczinski wrote in a Friday memo to employees and shared with investors. "We will look to our strategy and our values to guide how we reach those decisions and support every impacted member of the company. We expect to finalize and begin to communicate key decisions by April 3."

Despite beginning 2023 from a position of strength, Kempczinski said "we cannot stand still. "

"We're performing at a high level, but we can do even better," he said in the memo.

The executive said he plans to build on the company's Accelerating the Arches growth strategy, first introduced in late 2020. The new plan calls for eliminating "silos" within the company by having more of "collective focus of our entire system," he said.

The chain also plans to add more restaurant units, and appointed Andrew Gregory as senior vice president of global franchising and development.

Kempczinski added the company wants to scale innovations faster than ever before, and cited Ray Kroc, who built the McDonald's empire, in his memo: "As Ray Kroc used to say, "If you're not green and growing, you're ripe and rotting."

In the coming weeks, company leaders will share upcoming changes with staff, he said.

"Certain initiatives will be de-prioritized or stopped altogether. This will help us move faster as an organization, while reducing our global costs and freeing up resources to invest in our growth," Kempczinski said.

In the company's latest quarter, US same-store sales increased more than 6%, marking the ninth consecutive quarter of growth for the chain. Same-store sales are an indicator of a company's financial health.

Still, like most of the industry, McDonald's faces headwinds tied to labor and commodity costs.

Roughly 50% of restaurant operators across the US expect to be less profitable in 2023, according to a news survey released this week by the National Restaurant Association.