Why did McDonald’s leave Walmart?

McDonald’s has closed most of its in-store Walmart outlets as part of its continued exit strategy which began years earlier, but has been accelerated by the current pandemic.

In April 2021, the first reports highlighting the lack of availability of McDonald’s outlets at Walmart stores began circulating. However, reports analysed the sudden quickening in the closure in the past year. The reason being that the closure of the McDonald’s outlets found in Walmart stores had been an ongoing de-investment project by the fast food chain.

The de-investment is speculated to be a continued drift in what was initially a mutually beneficial business relationship. Furthermore, there was an advent of online shopping and a decline in physical walk-ins to stores, even before the pandemic. Therefore, the availability of McDonald’s in Walmart stores served both parties, as customers would buy McDonald’s and spend even longer in stores, which would ideally be converted into sales.

However, with the advent of online stores and shopping, McDonald’s having to pay to rent spaces in Walmart stores did not bear the same profits or returns. This could arguably mean that a once mutually beneficial relationship began to tip the scales to a single party.

Therefore, it can be supposed that the pandemic did accelerate the de-investment of McDonald’s in Walmart in-store outlets. However, the pandemic did not cause the de-investment project to occur. At the end of 2020, there were less than 150 in-store McDonald’s outlets. The number is low, considering that at the height of the then mutually beneficial relationship, Walmart boasted over 1 000 McDonald’s outlets.

In 2020, Walmart was quoted as saying, “We are excited to continue to bring in new businesses that make sense for our customers and their changing needs.” These changes included introducing more mobile offerings, such as testing smooth vending machines, and introducing more fast food outlets popular within the state, like Charleys Philly Steaks.