McDonald’s restaurants inside Walmart stores are facing closures. The reason might surprise you: McDonald’s is shutting down hundreds of its Walmart locations because customers now prefer online shopping and drive-thru service, leading to lower revenue for McDonald’s restaurants inside Walmart. There are various other reasons attributed to the closures.
In this report, we will look at how this retail-restaurant alliance evolved over 30 years and what location data reveals about these closures. The study also explores Walmart’s plans to fill the empty spaces left by McDonald’s exit.
Key Findings
- The first McDonald’s-Walmart alliance began in 1994 when McDonald’s opened its first store.
- The restaurant-retail partnership (McDonald’s and Walmart) once thrived with around 1,000 McDonald’s inside Walmart stores across the United States during peak times.
- Continuous closures of McDonald’s stores inside Walmart leave just 150 restaurants in Walmart’s 3,570 SuperCenters.
- McDonald’s annual report in 2020 mentioned plans to close roughly 325 restaurants in total in 2021. Of these, a majority were located in Walmart. McDonald’s planned it due to lower sales volume.
- McDonald’s closed 246 locations in April 2021 alone. Of which, 92% means 227 stores were closed in 2021 alone.
- The first McDonald’s-Walmart alliance began in 1994 when McDonald’s opened its first store inside Walmart near the front entrances, offering a convenient dining option for shoppers.
- Texas, Florida, and Arizona experienced the highest number of closures, correlating with Walmart’s increased e-commerce penetration and curbside pickup services in these states.
- California retained many McDonald’s inside Walmart stores. It has McDonald’s in Palm Springs, Bakersfield, and Torrance.
- Urban Walmart locations saw McDonald’s closures faster, with about 65% closing by mid-2021, while rural stores retained McDonald’s restaurants longer.
- McDonald’s Walmart locations generated about $900,000 annually on average, compared with the $2.1 million average for standalone McDonald’s restaurants.
- The lack of drive-thru service at Walmart locations was a major factor in underperformance.
- Walmart has replaced many former McDonald’s locations with other fast-food chains like Taco Bell and Domino’s, as well as service businesses such as salons, tool rentals, and automated smoothie vending machines.
- New partnerships with regional and national food brands, including Knuckies Hoagies, One Kitchen USA, Nathan’s Famous, and Charleys Philly Steaks, are part of Walmart’s strategy to fill vacant restaurant spaces.
- The latest McDonald’s inside Walmart to close is in Stouffville, which officially closed on October 19, 2025.
The 30-Year McDonald’s and Walmart Partnership
First Store Opened in 1994:
The McDonald’s and Walmart alliance began in 1994 when McDonald’s opened near Walmart’s front entrances. Shoppers could grab a meal as they entered or left the store. The careful placement made the restaurants easy to spot and created a smooth shopping and dining experience. These first in-store locations showed what would later sweep across the nation. The restaurants took up about 1,000 square feet inside Walmart stores. Traditional McDonald’s restaurants were much bigger at 4,000 square feet.
McDonald’s saw a significant opportunity to grow without spending much on real estate. Walmart gained a trusted food brand that made shopping more enjoyable and kept customers in stores longer.
1,000 McDonald’s in Walmart by the early 2000s
The alliance reached its peak in the early 2000s with approximately 1,000 McDonald’s restaurants inside Walmart stores nationwide. This made up nearly 8% of all McDonald’s restaurants in the U.S. Walmart aggressively expanded its Supercenters at the same time. McDonald’s recognized Walmart’s growth across American suburbs and rural areas. The restaurant chain became a key part of the Walmart experience.
Mutual Benefits for McDonald’s and Walmart
Both companies gained advantages from their 30-year partnership.
- Walmart got more than just rent money by hosting McDonald’s. The restaurants attracted more shoppers, especially during lunchtime.
- People often choose Walmart because they can run errands and grab a familiar meal in one stop.
- On top of that, it kept shoppers in the store longer. People who stopped for food spent more time browsing and usually bought more items.
- Each brand helped the other. McDonald’s gained Walmart’s huge customer base, while Walmart became an even better one-stop shop.
- McDonald’s benefited from steady customer traffic without spending much on new buildings.
- The setup costs less to run with its smaller size, shared utilities, and simpler operations compared to regular restaurants.
Why Is McDonald’s Leaving Walmart Stores? A Strategic Shift
McDonald’s and Walmart’s strong partnership began to fall apart in 2020. This marked a major turning point for both retail giants. Their relationship changed as customer behavior and business needs evolved rapidly over the last several years.
2020: 100 closures announced
McDonald’s took its first big step away from Walmart by announcing plans to close around 100 restaurants inside its stores. This kicked off what would later become a much bigger exit. The COVID-19 pandemic hit at the same time, which completely changed how people shopped and ordered food nationwide. These closures gave us the first hint of McDonald’s new direction for its Walmart locations.
2021: 227 McDonald’s closures in April 2021 (Inside Walmart)
The exit process accelerated in April 2021, when McDonald’s shut down 246 restaurants across the United States. Of the 246 McDonald’s restaurants that closed in April 2021, a remarkable 227 (about 92%) were inside Walmart stores. Company leaders said these closures were part of their plan to cut underperforming locations. These numbers showed that McDonald’s specifically targeted its Walmart locations.
2022: Only 150 McDonald’s remain in Walmart
By 2022, roughly 150 McDonald’s restaurants still operated within Walmart’s 3,570 SuperCenters nationwide. This was nowhere near the peak of about 1,000 in-store locations during the early 2000s. McDonald’s presence in Walmart stores dropped by about 85% in just two years. Their once-common partnership became a rare sight for shoppers.
2025
The latest In Stouffville, McDonald’s location inside the Walmart, which had been open since 2006, officially closed on October 19, 2025.
Location Intelligence: Mapping the Decline of McDonald’s in Walmart
Location data shows clear patterns in McDonald’s exit from Walmart stores nationwide. A clearer picture emerges when we look at where stores are located and how they connect with other retail trends. This helps explain why McDonald’s is ending its decades-long partnership with America’s largest retailer.
States with the Highest Closures:
- Texas
- Florida
- Arizona
The McDonald’s-Walmart breakup hit some areas harder than others. Texas, Florida, and Arizona saw the most closures. More in-Walmart McDonald’s existed in these states to begin with, and local shopping habits might have played a role. These states also drove Walmart’s push toward e-commerce and curbside pickup.
State that still has Significant McDonald’s Stores
California
A number of Walmarts across California still have McDonald’s locations, including stores in Palm Springs, Bakersfield, and Torrance.
Detailed Statistics Table of McDonald’s Leaving Walmart (Location-wise)
| Year | Total Closures | Percentage Inside Walmart |
| 2020 | 100 | 100% |
| 2021 | 246 (April) | 92% (227 locations) |
| 2022 | Ongoing | — |
#1 Urban vs Rural Distribution of Closures
McDonald’s departures from Walmart locations show notable differences between city and country areas. City locations closed faster, with urban areas seeing approximately 65% of their in-store locations shut down by mid-2021. Rural Walmart stores kept their McDonald’s restaurants longer.
#2 Heatmap Analysis of the Southern U.S. Concentration
The closure data map shows a clear concentration in the southern United States. Texas, Florida, and Arizona saw the highest numbers of closures and the most McDonald’s departures from Walmart per person.
#3 Correlation with Walmart e-commerce penetration
McDonald’s closures are also linked to Walmart’s growth in online shopping. Areas where more people signed up for Walmart+ and ordered groceries online saw more McDonald’s closures than areas with fewer digital customers. This link suggests that as Walmart customers move toward online ordering and pickup, in-store dining becomes less important..
Analysis of Closure Data (Location-wise)
Store-level data gives us more information about which locations saw the earliest and most complete McDonald’s exits:
| Store Type | Closure Rate | Average Time in Partnership | Replacement Strategy |
| Supercenter | 78% | 18.3 years | Ghost kitchens/food courts |
| Neighborhood Market | 95% | 7.2 years | Grab-and-go options |
| Express Format | 100% | 5.4 years | No replacement |
Neighborhood Markets and smaller Walmart locations lost their McDonald’s restaurants fastest. Space limits likely made these spots less profitable for both companies. Stores near interstate exits or major highways kept their McDonald’s more often than those in shopping centers. This shows that traveler convenience still matters more than in-store shopping.
This location intelligence study shows that McDonald’s leaving Walmart isn’t just a simple business decision. Regional factors like population changes, online shopping rates, and specific location features all play important roles in this shift.
Both companies’ changing business models led to this strategic exit from Walmart locations.
1. Lower Revenues: McDonald’s restaurants inside Walmart brought in less than half the average for standalone restaurants. The main reason is that other McDonald’s locations have drive-thru options, which these Walmart-based stores lack. The lack of drive-thru options at Walmart locations became a bigger issue as customers strongly preferred drive-thru service during and after the pandemic.
2. Walmart’s introduction of food options: Walmart has started using its store spaces differently. They’re introducing new food options and non-food alternatives. This reduces reliance on McDonald’s for food options. It also lowers McDonald’s revenues.
Why McDonald’s in Walmart Underperformed Financially?
Numbers tell the real story behind McDonald’s breakup with Walmart. The financial data shows why this partnership, which looked promising at first, ultimately failed for the fast-food chain.
McDonald’s restaurants inside Walmart made much less money than their regular locations. The numbers paint a clear picture: Walmart spots brought in about $900,000 per year, while regular McDonald’s locations made $2.1 million. This huge 57% difference in revenue meant Walmart locations weren’t profitable enough, despite lower operating costs.
#1 Smaller Spaces
Most Walmart McDonald’s were squeezed into less than 1,000 square feet, with room for only 20-30 customers at a time. They couldn’t handle busy lunch rushes or big groups well. These locations also ran with smaller menus and couldn’t sell many high-profit specialty items that regular McDonald’s restaurants depend on.
#2 Lack of drive-thru
Regular McDonald’s restaurants get about 70% of their revenue from drive-thru sales. Walmart locations didn’t have this vital source of income. They had to rely completely on people walking through Walmart stores.
#3 Rise of Online Orders
Customer habits changed dramatically after 2020. This put extra pressure on Walmart and McDonald’s, which were already struggling. People wanted more convenient options, such as mobile ordering, delivery, and drive-thru service. Walmart pushed hard into curbside pickup and online grocery services. Many customers stopped coming into stores, leading to lower foot traffic at McDonald’s.
Kevin Ozan, McDonald’s Chief Financial Officer, said they closed these locations because they weren’t profitable. He explained that this fit with McDonald’s plan to focus on locations with better growth potential.
| Subway Also Exiting Walmart Like McDonald’s, Subway faces big challenges with its Walmart locations. About 8% of Subway’s total U.S. restaurants are inside Walmart stores. However, this is comparatively a smaller share than McDonald’s had at its peak. The chain has shut down around 1,600 locations across the country since 2020, with many closures happening inside Walmart stores. Both chains faced the same problems, including tight spaces, no drive-thrus, and shoppers changing their habits. Yet Subway managed to keep some spots running despite fewer shoppers. Subway needs less space (600-800 sq. ft., compared to McDonald’s 1,000+ sq. ft.). |
Walmart’s New Strategy Post McDonald’s Exit
Walmart quickly developed new ways to fill the vacant restaurant spaces after McDonald’s left.
Taco Bell and Domino’s pilot programs
Walmart swiftly turned to other national fast-food chains after McDonald’s left. Taco Bell stepped in as a replacement by launching pilot programs in select Walmart Supercenters. (Source) These programs focused on southern states where McDonald’s had closed most of its locations. Domino’s Pizza also opened compact storefronts inside several Walmart stores. They now serve both in-store customers and deliver to nearby neighborhoods.
Non-food Replacements: Salons, Tool Rentals
Walmart turned many old McDonald’s spots into service-based businesses. Hair salons, nail studios, and eyebrow threading counters now fill these spaces, bringing customers back regularly. (Source) Some locations host tool rental centers that complement Walmart’s existing product line. These service-based options show how Walmart wants to create experiences that online shopping can’t match.
Smoothie Vending Machines
Walmart introduced automated food options that require fewer workers in smaller former McDonald’s spaces. High-tech smoothie machines from companies like Jamba now operate in dozens of stores. These machines make fresh, custom smoothies without needing food service staff. Sushi counters have also popped up in many locations, especially in wealthy suburban areas where customers prefer premium food choices.
Partnerships with Other Restaurants
- In August 2024, Walmart partnered with Knuckies Hoagies, a Milton, Ga., chain, a Sandwich specialty company. (Source: The Street)
- Walmart store in Reno replaced McDonald’s restaurant with a One Kitchen USA franchise. (Source)
- Nathan’s Famous plans to open 100 new Walmart locations by 2023, often using ghost kitchen setups. (Source)
- Charleys Philly Steaks has already opened 50 Walmart stores since 2021, when it opened its first store at a Walmart in Hoover, Alabama, and wants to add 100 more. (Source)
Conclusion
The McDonald’s-Walmart partnership lasted 30 years, benefiting both, but it declined owing to revenue issues originating from changing consumer preferences. The closures of McDonald’s locations inside Walmart stores highlight the impact of changing shopping habits and also guide us about the importance of location in the restaurant business. For instance, locations without drive-thru services are not preferred by customers. This case study underscores the importance of location intelligence in understanding market dynamics, customer behavior, and strategic business decisions.
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