"Tough Place": Implosion Of Downtown San Francisco Forces McDonald's To Close After 30 Years

The unraveling of San Francisco's office sector has been stunning so far. The once-thriving urban center is now grappling with a record-high 30% vacancy rate in office buildings, attributed mainly to the shift towards remote and hybrid work in a post-Covid era, as well as a mass exodus of companies who no longer felt their office workers were safe because 'defund the police' policies backfired and sparked a citywide violent crime tsunami. Now, the ripple effects of a plunge in office workers, no longer walking the streets and spending money at brick-and-mortar shops, have darkened the city's recovery.

On Friday, McDonald's restaurant at 235 Front St. in the Financial District served its last Big Mac after a three-decade run, according to San Francisco Business Times. 

Scott Rodrick, the McDonald's franchise owner, said the "post-pandemic realities of operating the downtown restaurant simply became unbearable for the franchisee and McDonald's Corp." 

"The economics of running a franchised restaurant in San Francisco continue to be a challenge, particularly in a downtown that is impacted by high office building vacancy rates and visitor trends that have not recovered since the pandemic," Rodrick wrote in an email to the local media outlet. 

Rodrick said San Francisco "continues to be a very tough place to own and operate a restaurant business, irrespective of price point." He said traffic at the restaurant had dropped off a cliff. 

"Office building vacancies, the environmental atmosphere of downtown sidewalks and a tepid return by tourists and conventioneers all drove the decision" to close the restaurant, Rodrick wrote.

This is a troubling development for the commercial real estate industry because the crisis is spreading. And given that retail businesses rely heavily on office workers - this spells disaster for any recovery in the local economy in the short term. 

For retail shops to thrive, foot traffic generated by office workers and tourists is needed. 

In recent weeks, Marc Benioff, the CEO of Salesforce, San Fran's largest employer and anchor tenant in the city's tallest skyscraper, urged radical Democrats in City Hall to reverse course on defunding the police. This call from Benioff, alongside other top business leaders, suggests a growing separation from previously 'woke' policies pushed by City Hall. However, these calls to reverse disastrous progressive policies could be too late. 

We noted earlier this year that pressure on Democrat Mayor London Breed was increasing as she embarrassingly reversed course on her defunding the police initiatives. 

Perhaps in the next local election, law-abiding taxpayers in San Francisco may consider demanding accountability from Democratic leaders for the city's collapse, which has led to some areas in the metro area being comparable to the hellholes of Detroit and Baltimore City.