McDonald’s will open a new innovation center called Speedee Labs in its downtown Chicago headquarters, relocating 120 jobs from its current suburban center, CEO Chris Kempczinski said in a provocative talk yesterday at The Economic Club of Chicago.
“We’re betting on Chicago,” but McDonald’s commitment to the city “is not open-ended, is not unconditional,” he said as he discussed crime and company headquarters departures including Boeing, Caterpillar and Citadel. “There’s a general sense our city is in crisis.”
Named president and CEO of McDonald’s in 2019, Kempczinski said he always gets questions while traveling the globe: “What’s going on in Chicago?” Later in a Q&A with Mary Dillon, CEO of Foot Locker and former global chief marketing officer at McDonald’s, he asked the Economic Club audience, “How many people—with a show of hands here—would say they knew what the plan is? Exactly what are we doing? What are the metrics? How are we going to track progress?” in dealing with crime.
“I mean, this is what you do in business, day in and day out. You have a plan, you have a set of vectors, you have milestones, you track progress. How are we doing on that?” He said crime is “seeping into every corner of our city…and can become pervasive in the psyche.”
Violent crime, drug overdoses in restaurants
In the Q&A session at the high-powered club whose members include business moguls, Dillon asked about the impact “with the crime situation” on McDonald’s employees. “As I mentioned we have 400 restaurants across this city, employing tens of thousands of people, and it’s felt most significantly every single day in the restaurants,” he said. “Certainly, we have violent crime happening in our restaurants, we’re seeing homelessness in our restaurants, we’re having drug overdoses in our restaurants. Whatever’s happening in society, it’s happening in McDonald’s.”
The ties between McDonald’s and the city of Chicago “run very deep,” he said, noting legendary leader Ray Kroc made sure to open milestone stores, including his first, his 100th and his 2,000th in the Chicago area. “In Chicagoland we operate 400 restaurants. We’ve spent $20 million on renovating the restaurants in the Chicago area. As a global business we have 5,000 franchisees across the globe” as well as thousands of suppliers, and “all of them come to Chicago,” he said, to stay in its hotels and eat in its restaurants.
McDonald’s posted $112.5 billion in systemwide sales last year, up 20.6 percent from the prior year, according to the Franchise Times Top 500 for 2022, which will publish October 1. It had 40,031 total units, with 13,438 of those in the United States. See the 2021 ranking of 400 franchise brands by systemwide sales here.
“We went into the West Loop in 2018,” moving 2,000 employees from suburban Oak Brook to the former meat-packing district downtown, “and it’s safe to say the West Loop is booming, and we believe we’ve been an important catalyst of that,” he said.
“McDonald’s economic contribution to the city of Chicago is $2 billion a year. What if McDonald’s wasn’t here? It would be $2 billion” that left the city “overnight. Can you imagine Chicago without McDonald’s? I cannot. But we also need to face facts, and the facts haven’t been especially kind to the city of Chicago of late. The fact is there are fewer companies headquartered in Chicago this year than last year.”
‘Doubling down’ with Speedee Labs
He said others sense the “vulnerability” of Chicago. “I’ve heard from the mayors and governors who’ve made their case to me, for McDonald’s to relocate our headquarters to their city and their state.” But he added, “McDonald’s is doubling down. We’re going to be here,” as he announced the new Speedee Labs.
The name is an homage to McDonald’s Speedee Service System, introduced in 1948, that “revolutionized the way a restaurant could operate,” the company said in a press release. It will open in 2023 and shift 120 jobs downtown. “SpeeDee Labs is where we’ll envision the future of McDonald’s, and that will happen right here in Chicago,” Kempczinski said.
McDonald’s opened its Innovation Center in Romeoville in 2001, where people “practiced” using equipment and processes to improve speed. In 2020, the company unveiled its newly renovated lab there, designed by San Francisco-based interior design firm Studio O+A, the same firm that designed its $250-million downtown headquarters interior.
The center is where the fast-food giant “puts experimental food-preparation equipment through its paces,” according to Metropolis magazine. “More than perfunctory nods to company lore, these moves place emphasis on the humble mechanical innovations that enabled McDonald’s globe-spanning rise.”
The purpose of the Innovation Center is “not to develop novel menu items, but rather to test out new equipment and workflow procedures,” Metropolis said.