McDonald’s chief executive says the city must ‘face the facts’ about the city centre

McDonald’s CEO Chris Kempczinski expressed concern about the effects of crime on Chicago business, even as the company announced plans to bring more of its employees from the suburbs to the city center.

In a speech at the Economic Club of Chicago on Wednesday, Kempczinski addressed the recent departures of high-profile companies such as Caterpillar, Boeing and Citadel from the Chicago area, saying the city must “face the facts.”

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

McDonald’s was located in Oak Brook from the early 1970s until 2018, when it moved 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 will call Speedee Labs, from Place Romeoville to its headquarters in the city center. This move will create up to 120 jobs in the city center.

The move follows significant departures from the Chicago-based company earlier this year.

The Boeing took off for Arlington, Virginiain a move that brought him closer to decision makers in Washington, while Caterpillar went from Deerfield to Texas. Billionaire hedge fund manager Ken Griffin, a vocal critic of downtown crime, said in June that he was moving the headquarters of his investment firm, Citadel, to Miami.

Kempczinski said he’s heard from governors and mayors who want to get McDonald’s headquarters out of Chicago, and said he’s had a harder time convincing executives to move to the city than it was a few years ago.

When it moved to the city center in 2018, McDonald’s joined a number of large companies that have moved from the suburbs to the city in an attempt to attract young talent. The Fulton Market neighborhood, where the company’s headquarters are located, proved to be the chosen destination. In 2020, McDonald’s published applications for corporate jobs it has jumped 20% since the move.

Now, as plans to return to the office have been discussed, Kempczinski said he’s heard concerns from employees who aren’t sure if it’s safe to work downtown.

“A lot of times it’s easy to say, well, that’s just perception. That is not reality. In our business, other people’s perceptions become our reality,” he said on Wednesday.

Despite a tumultuous summer, Chicago entered September with its lowest homicide total since 2019 after a spike in violence last year. For the first six months of this year, city officials reported double-digit decline in homicidesalthough homicide and shooting numbers were still higher compared to 2019 numbers, before the pandemic and 2020 unrest.

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 later nine people were shot, two fatally, Tuesday night in Washington Park, in what police said was possibly a gang-related altercation.

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

Kempczinski faced calls for resignation after he appeared to blame parents Adams and Adam Toledo, 13, for the shooting of their children in text messages with Mayor Lori Lightfoot released through a Freedom of Information Act request. Toledo was killed by a Chicago police officer during a foot chase in Little Village in March 2021, about three weeks before Adams.

The director later apologized.

On Wednesday, Kempczinski said the company spoke with city leaders after the May shooting near the Chicago Avenue store to discuss what the company needs to operate the restaurant, saying McDonald’s does not want to close it.

“The worst thing that could happen would be for McDonald’s, when problems start happening in the neighborhood, we start pulling out,” he said.

Kempczinski, who became CEO in 2019, said he extols the virtues of Chicago to those outside the city and highlighted the company’s philanthropy in Chicago. He called for greater cooperation between the public and private sectors.

Last week, McDonald’s announced that it has 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 talk about Chicago as a 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 it, they would not support it. We are betting on Chicago in the long term because we think it makes good business sense.”

McDonald’s generated revenue of $5.72 billion in the second quarter. Its U.S. sales rose 3.7%, which the company’s then-CFO, Kevin Ozan, attributed during an earnings call in July to higher average checks driven largely by price increases.

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

“This is a very challenging environment for our McFamily,” Kempczinski said in a July earnings call.

McDonald’s plans to exit its Romeoville lease late next year and will open a 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 St. headquarters.

Employees of the company’s innovation center have been working in Romeoville since 1995. There are engineers, researchers and designers tested new technology and used fake drive-thrus experiment with ordering processes in the 38,000-square-foot facility.

“The needs of our customers and restaurant 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 Wednesday announcing the move.

The mayor’s office did not immediately respond to Kempczinski’s comments about downtown, but praised the innovation center’s move in a statement released earlier in the day.

“This new addition will attract 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,” Lightfoot said.

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