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

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

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

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

McDonald’s was based in Oak Brook from the early 1970s to 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 is naming Speedee Labs, from its Romeoville location to its downtown headquarters. The move will shift up to 120 jobs downtown.

The move comes in the wake of 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 to Texas. Billionaire hedge fund manager Ken Griffin, a vocal critic of crime downtown, said in June he was moving the headquarters of his investment firm, Citadel, to Miami.

Kempczinski said he has heard from governors and mayors seeking to woo McDonald’s headquarters out of Chicago and said it was more difficult for him to convince executives to relocate to the city than it was a few years ago.

When it moved downtown in 2018, McDonald’s joined a flurry of big businesses making the shift from the suburbs to the city in a bid to attract young talent. The Fulton Market district, where the company’s headquarters are located, emerged as a choice destination. In 2020, McDonald’s said applications for corporate jobs had spiked 20% since the move.

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

“It’s a lot of times easy to say, well, that’s just perception. That’s not reality. In our business, other people’s perception becomes our reality,” he said Wednesday.

Despite a tumultuous summer, Chicago headed into September with its lowest homicide total since 2019 following increased violence last year. For the first six months of the year, city officials reported a double-digit decline in homicides, though homicide and shooting numbers were still up when compared with 2019 numbers, before the pandemic and the unrest 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 evening in Washington Park, in what police said was likely a gang-related conflict.

McDonald’s is no stranger to the 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 in the drive-thru lane at a McDonald’s in the Homan Square neighborhood.

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

The CEO later 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 did not want to close it.

“The worst thing to have happen would be for McDonald’s, when the trouble starts happening in a neighborhood, for us to start backing out,” he said.

Kempczinski, who became CEO in 2019, said he extols Chicago’s virtues to those 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. Recipients of the community grants 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 being 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 “isn’t corporate altruism.”

“It’s not open ended, it’s not unconditional,” he said. “As a publicly traded company, our shareholders wouldn’t tolerate that, they wouldn’t support that. We’re betting on Chicago in the long term because we think it makes good business sense.”

McDonald’s posted revenue of $5.72 billion in the second quarter. Its U.S. sales grew 3.7%, which the company’s CFO at the time, Kevin Ozan, attributed during a July earnings call to higher average checks driven mostly 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 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 St. headquarters.

The company’s innovation center employees have worked out of Romeoville since 1995. There, engineers, researchers and designers tested out new technology and used mock drive-thrus to experiment with ordering processes in a 38,000-square-foot facility.

“Our customers and restaurant teams’ needs are changing, and meeting their expectations requires us to work together in new ways,” said Manu Steijaert, the company’s executive vice president and chief customer officer, 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 move in a news release issued earlier in the day.

“This new addition will draw 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.