Why do McDonald’s, Google, and Soho House want to be near meatpacking?
McDonald’s wants to update its image and recruit entrepreneurial cool kids. The cool kids are in gritty (or formerly gritty) urban neighborhoods that attract tech startups and creative types. Hence, McDonald’s is moving its headquarters from suburban Oak Brook , Illinois, to the Fulton Market area in the West Loop of Chicago.
For those of you who have not been to Chicago recently, the Fulton Market has morphed from a decaying industrial wasteland to the home of entrepreneurs and farm to table restaurants. In its heyday, this meatpacking district was a distribution center for Chicago’s stockyards. Even today, a few meat wholesalers are still in operation side by side with the digital crowd.
An easy analogy could be made to New York’s meatpacking district, which was transformed by Google, SoHo House, avant-garde fashion designers, and a flagship Apple store more than ten years ago. Google established its NYC outpost to attract creative talent in fashion, media and the arts. Silicon Valley has plenty of engineers, but it lacks the broader skills that connect technology to the real world. Now, McDonald’s is following Google and a host of startups to Chicago’s meatpacking district in order to tap into their culture and talent pool.
Steve Case, the founder of AOL, describes the Third Wave of the Internet revolution as “the era when the Internet stops belonging to Internet companies. It is the era in which products will require the Internet, even if the Internet doesn’t define them.”
Excerpt From: Steve Case. “The Third Wave.” iBooks. https://itun.es/us/nZfC8.l
This means that pre-Internet companies like McDonald’s must join the technology revolution if they are to survive. One implication of the Third Wave is that tech startups will gravitate to cities where they can partner with established industries. A less obvious implication is that forward-thinking mature companies will move to neighborhoods where they can be around the startups.
McDonald’s move is not an isolated incident. In Chicago alone, Motorola, Kraft Heinz, and Conagra are among the 50 companies that have moved their corporate headquarters to the city from the suburbs, since 2007. GE is relocating from its suburban campus in Connecticut to the Seaport District in Boston, and Chemours, which spun off from DuPont in 2015, elected to stay in downtown Wilmington rather than move to the burbs.
Urban job growth is not entirely new. As reported by City Observatory, city centers began to reverse a 50 year exodus of jobs to the suburbs in 2007. McDonald’s and GE are not just relocating downtown, however. They are moving to gritty urban neighborhoods that no mature Fortune 500 company would have considered ten years ago.
http://cityobservatory.org/city-center-jobs/
Headquarters relocations do not necessarily bring a lot of new jobs to center cities. They do bring high paying and influential jobs, and they build on the ecosystem. Law firms, ad agencies, and software providers will want to be near the headquarters, and they may relocate as well. Whether the cool kids want to attend Hamburger University remains to be seen, but one thing is clear. Corporate America is figuring out that if they want to attract the right talent, they need to go where the talent is.
See more stories by Mitch Wasterlain in the Resource Center at https://www.capfundr.com/
