McDonald's plans to expand West Loop headquarters, but CEO says city needs to 'face the facts' about downtown business climate

McDonald’s plans to expand West Loop headquarters, but CEO says city needs to ‘face the facts’ about downtown business climate

McDonald’s CEO Chris Kempczinski has raised concerns about the effects of crime on business in Chicago, even as the company announced plans to bring more of its suburban workers downtown.

In a speech to the Economic Club of Chicago on Wednesday, Kempczinski referenced the recent departures of major companies such as Caterpillar, Boeing and Citadel from the Chicago area, saying the city needed to “face the facts.”

“The fact is, there are fewer large companies headquartered in Chicago this year than there were last year,” he said.

McDonald’s was based in Oak Brook from the early 1970s until 2018, when it moved about 2,000 employees to a new $250 million headquarters in the West Loop.

The burger giant now plans to move its innovation center, which it calls Speedee Labs, from its Romeoville location to its downtown headquarters. The move will move up to 120 jobs downtown.

The move comes following the high-profile departures of Chicago-based companies earlier this year.

Boeing left for Arlington, Virginia, in a move that brought it closer to decision makers in Washington, while Caterpillar decamped from Deerfield, Texas. Billionaire hedge fund manager Ken Griffin, an outspoken critic of downtown crime, said in June he was moving the headquarters of his investment firm, Citadel, to Miami.

Kempczinski said he’s heard from governors and mayors looking to woo McDonald’s headquarters out of Chicago and said it’s been harder for him to convince executives to move to the city than it was a few years ago.

When it moved downtown in 2018, McDonald’s joined a wave of big companies that moved from the suburbs to the city in an effort to attract young talent. The Fulton Market area, where the company’s head office is located, has established itself as a destination of choice. In 2020, McDonald’s said applications for corporate jobs increased 20% since the move.

Now, when discussing back-to-office plans, Kempczinski said he’s heard concerns from employees who aren’t sure it’s safe to work downtown.

“It’s often easy to say, well, it’s just a perception. This is not reality. In our business, the perception of others becomes our reality,” he said on Wednesday.

Despite a tumultuous summer, Chicago headed into September with its lowest homicide total since 2019 after violence spiked last year. In the first six months of the year, city officials reported a double-digit drop in homicides, though the number of homicides and shootings are still up from 2019 numbers, before the pandemic and the troubles of 2020.

The city has also seen a steady stream of random public crime on Chicago Transit Authority trains and on the streets, including armed robberies and carjackings. Kempczinski’s comments came a day after nine people were shot, two fatally, Tuesday night in Washington Park in what police said was a gang-related dispute.

McDonald’s is no stranger to violence. In May, nine people were shot, two fatally, near a Near North Side McDonald’s at Chicago Avenue and State Street. Last year, 7-year-old Jaslyn Adams was shot dead in the drive-thru lane of a McDonald’s in Homan Square.

Kempczinski was called to resign after he appeared to blame the parents of Adams and 13-year-old Adam Toledo for the shooting deaths of their children in a text exchange with Mayor Lori Lightfoot made public by a Freedom of Information Act. Toledo was killed in March 2021, about three weeks before Adams, by a Chicago police officer during a foot chase through Little Village.

The CEO then apologized.

On Wednesday, Kempczinski said the company had conversations with city leaders after the May shooting near the Chicago Avenue store to discuss what the company needed to operate the restaurant, saying McDonald’s didn’t want the close.

“The worst thing that could happen would be that McDonald’s, when trouble starts happening in a neighborhood, starts to back down,” he said.

Kempczinski, who became CEO in 2019, said he touted Chicago’s virtues outside the city and highlighted the company’s philanthropy in Chicago. He called for more collaboration between the public and private sectors.

Last week, McDonald’s announced it had donated a total of $3.5 million to 40 Chicago nonprofits in partnership with the Chicago Community Trust. Community grant recipients include 100 Black Men of Chicago Inc., Chicago Urban League, Instituto del Progreso Latino, My Block My Hood My City, and Chicago CRED.

“The ties between McDonald’s and the city of Chicago run very deep. While others may refer to Chicago as the second city, I think it’s safe to say that for McDonald’s, the city of Chicago has always been our first city,” he said.

Still, Kempczinski said, the company’s commitment to the city “is not corporate altruism.”

“It’s not open, it’s not unconditional,” he said. “As a publicly traded company, our shareholders would not tolerate this, they would not support this. We are betting on Chicago for the long term because we believe it is a good trading decision.

McDonald’s posted revenue of $5.72 billion in the second quarter. Its U.S. sales rose 3.7%, which the company’s then chief financial officer, Kevin Ozan, attributed in a July earnings call to higher average checks, mostly in due to rising prices.

Like most fast food companies, McDonald’s is dealing with high inflation and consumer fears of an impending recession.

“It’s a very challenging environment for our McFamily,” Kempczinski said on the July earnings call.

McDonald’s plans to exit its Romeoville lease at the end of next year and will open the downtown lab in phases during the second half of 2023. The company will lease an additional 15,000 square feet for the lab in the same building as its 110 N. Carpenter Headquarters St.

Employees of the company’s Innovation Center have worked in Romeoville since 1995. There, engineers, researchers and designers tested new technologies and used drive-thru simulations to experiment with ordering processes in a facility of 38,000 square feet.

“The needs of our customers and catering teams are changing, and meeting their expectations requires us to work together in new ways,” Manu Steijaert, the company’s executive vice president and chief customer officer, said in a statement on Wednesday. press release announcing the move.

The mayor’s office did not immediately respond to Kempczinski’s comments about downtown, but welcomed the innovation hub’s move in a press release issued earlier in the day.

“This new addition will bring even more visitors from around the world to our city, and I look forward to welcoming them as they come to collaborate and innovate with this iconic brand,” said Lightfoot.

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