Please ensure Javascript is enabled for purposes of website accessibility

McDonald's Is Closing Hundreds of Walmart Location Stores

By Howard Smith - Updated Apr 9, 2021 at 12:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pandemic continues to define how fast-food restaurants and retailers will adjust business models.

Fast-food giant McDonald's (MCD 1.00%) and the nation's largest retailer have had a mutually beneficial relationship for years. Restaurants placed inside Walmart (WMT 0.57%) stores gave shoppers easy access to a quick meal, added business for the restaurant chain, and gave the retailer rental income and a reason for shoppers to spend more time at its stores. 

But the pandemic has led to an increase in food delivery and the use of drive-thru windows. Indoor dining remains restricted or closed in some places, and foot traffic has also dropped as consumers move to online shopping or curbside pickup. Now McDonald's is closing hundreds of its restaurants inside Walmart locations, according to a Wall Street Journal report today.

McDonalds bacon mcdouble

A McDonald's Bacon McDouble. Image source: McDonald's.

The approximately 30-year relationship will not be completely severed. McDonald's will keep about 150 locations inside U.S. Walmarts. That's down from around 1,000 stores at the height of the partnership. The latest round of closures will be completed this summer, shutting locations based on their business volume. 

McDonald's isn't alone in redefining the in-store retail model. Franchisees of fast-food chain Subway are also closing Walmart locations, according to the report. The closures of in-store locations began prior to the pandemic, but McDonald's accelerated the moves as shopping behaviors changed over the last year. As online shopping has grown in popularity in recent years, sales in McDonald's Walmart locations increasingly came from Walmart employees, rather than customers. About one-third of food sales came from the store's employees at some of the restaurants, said a source for the Journal report. 

Walmart plans to replace some of the McDonald's stores with other chain restaurants. It plans to convert some to Ghost Kitchen locations, a kitchen chain supplying online orders from customers for multiple restaurant brands at once. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$128.34 (0.57%) $0.73
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$259.38 (1.00%) $2.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.