What: Fast-food chains are closing more in-store restaurants as the Covid-19 pandemic accelerates the demise of a once mutually beneficial relationship.

Why is it important: The closures is a challenge for Walmart, which has long counted on revenue from restaurants leasing space inside its stores.

For years Walmart Inc. and large restaurant chains like McDonald’s enjoyed a mutually beneficial relationship. Those bonds have frayed as more shopping goes online and fast-food restaurants depend more on drive-through windows for sales, a feature Walmart locations don’t have.

McDonald’s is closing hundreds of restaurants located in the largest U.S. retailer’s stores, the last vestiges of a roughly 30-year-old experiment between the companies. Franchisees of Subway, one of the largest fast-food chains in the world, also say they are closing locations this year, citing diminished foot traffic and lower profits.

The closures also could pose a challenge for Walmart, which has long counted on revenue from restaurants leasing space inside its stores. By contrast, rivals like Costco Wholesale Corp. runs its own restaurant space selling inexpensive pizza and hot dogs; Target Corp. operates its own food-service space under licensing agreements with partners such as Starbucks Corp.

Walmart is working to find new models for its store restaurants, focusing more on meals to-go, delivery and joining with small regional chains that appeal to local shoppers. Walmart is also testing smoothie vending machines in stores.

McDonald’s is closing hundreds of its Walmart restaurants