San Francisco's downtown business scene faces upheaval, with two longstanding establishments, 24 Hour Fitness and McDonald's, set to shutter their locations after nearly 30 years. The closures highlight the challenges of costly overheads, remote work trends, and the lingering impacts of the pandemic on brick-and-mortar businesses.
As reported by the San Francisco Chronicle, the three-story 24 Hour Fitness gym at 100 California St. will close on December 29, and the neighboring McDonald's at 235 Front St. has already closed down. Both businesses started their operations in 1994.
Speaking about the closure, Scott Rodrick, McDonald's franchise owner and president of Rodrick Management Group, pointed out the challenge of operating a franchise in San Francisco's business district. He specified being a downtown location, without parking or drive-thru, created additional difficulties. However, all of the McDonald's employees at the location have been offered a chance to transfer to nearby branches.
Also, 24-Hour Fitness members of the closing location have the chance to transfer their memberships to other locations at 45 Montgomery St. and 1200 Van Ness Ave., according to a Reddit post. The gym recently downsized its operating hours due to insufficient demand in the Financial District. The closure decision was communicated to members via a mass email, as reported in the same Reddit post.
The closures have resulted in a real estate firm, JLL, marketing about 20,000 square feet of retail space for lease at 100 California St., according to the San Francisco Chronicle. Furthermore, office spaces are also available for lease on the building's upper floors.
This isn't the first time that the Financial District has seen such closures. Previous victims include Banana Republic, two Starbucks, and two Amazon Go stores operating nearby. In response, the city launched a program in October called "Vacant to Vibrant," aiming to temporarily fill these empty spaces with 17 local businesses, some of which will be located at the Embarcadero Center.
Both 24 Hour Fitness and McDonald's have faced financial hardship throughout the pandemic. In 2020, 24 Hour Fitness filed for bankruptcy protection and closed around 150 locations nationwide, including 10 in the Bay Area, following statewide gym shutdowns due to health restrictions. Meanwhile, McDonald's reported Q3 revenue climbed 14% to $6.69 billion, surpassing analysts' estimates, yet they revealed plans to raise menu prices in California by 10% in 2024 to offset the state's minimum wage increase.