The ubiquity of McDonald's golden arches in Britain's high streets is such that it's hard to imagine a large town without the logo emblazoned on a prime retail spot.

But in Rochdale, the restaurant's windows are boarded and its familiar red and yellow sign, a visible landmark in the Lancashire town for 28 years, has been removed.

Last week McDonald's shut up shop, joining a growing number of key businesses deserting the town centre, and in so doing, according to shoppers and some retailers, banging another nail in the coffin of its struggling high street.

If Ronald McDonald can be relied upon to only go where the money is – the corporation pulled out of Iceland after the country's 2008 financial crisis – a retreat from Rochdale's principal shopping thoroughfare is being seen by some residents as an indicator of the town's high street health, or lack of it.

"I don't know of any other town that's shut its McDonald's," said Steve, as he rearranged unsold bouquets at the flower stall he has run in Rochdale's covered market for the past 18 years. "If fast food is at a low ebb, what chance do the rest of us have?" His turnover is 35% down as footfall and spending power has collapsed in the last 12 months, he said. "It's just been dreadful"

McDonald's is not deserting Rochdale. It has two other shops – but both are in out-of-town retail parks. It says it closed the branch on Yorkshire Street, right in the heart of the town, "after seeing trading patterns in the town centre change". Perhaps that can be explained as you make the 200-metre walk up Yorkshire Street, and count nine charity shops, eight pawnbrokers-cum-jewellers and cash converter stores and three pound shops – an increasingly familiar sight in many recession-hit towns.

Indications are it is set to get worse. Philip Green announced this week that 260 of his Arcadia group's stores are at risk of closure. Arcadia's Dorothy Perkins and Burton pulled out of Rochdale 11 months ago, perhaps giving credence to a theory voiced by some that the town acts as some kind of barometer.

In the Wheatsheaf shopping centre there is a cavernous hole where TJ Hughes, the discount brand now in administration, was until two months ago. McDonald's empty building adjoins the premises where the Body Shop traded until last year. The stricken Ethel Austin clothing chain closed in April. Where there was Woolworths , B&M Bargains has opened. On the old Littlewoods site, there are hopes for an Iceland.

With Rochdale the 29th most deprived authority out of 326 in English indices of deprivation in 2010, and with 7,741 people on jobseeker's allowance, some 5.9% of its population, budget stores seem to be the future.

And charity shops fill otherwise empty units. A 2009 survey indicated Rochdale was the third worst-hit retail centre in the country, with 29% of stores standing empty.

Liz Smith, 59, is in town to have her hair done, and visit the bank. "That's the only reason I come in now," she said. " Here it's just charity shops and pound shops."

"It's a dump," added her husband Anthony, 65, a former bus driver.

A multimillion-pound regeneration is under way, including a new Metrolink tram direct to Manchester and Oldham. "That's supposed to bring people in. I'd say it makes it easier for them to leave," added Anthony Smith.

Margaret, 72, who used to work in the now-closed Littlewoods, agrees. "It's just deteriorated, to tell you the truth. You used to be able to buy everything you wanted here. Yorkshire Street was always busy. Now we go to Bury, or Oldham."

On the website of the Rochdale Observer, readers have vented their frustration. "When even Ronald McDonald's … no longer believes there's a cat in hell's chance of making a fast buck from burgers and Coke here, we know Rochdale town centre is finished," wrote one.

Rochdale council knows it has a battle on its hands given the economic climate, but believes plans to build new council offices and a library, and convert the old council buildings into retail units to be open within two years will encourage rejuvenation and add diversity to the 200 retailers currently in the town centre.

Andy Zuntz, the council's executive director, said it was disappointed McDonald's closed "at such short notice" and without discussion, and also surprised, given the regeneration activity in the town centre.

On the steps outside the boarded-up restaurant, a group of around 10 teenagers greeted the closure with dismay. "Devastated," declared Gavin Hall, 17, "It's where we always meet. There's nothing else for teenagers here". "It's symbolic. It means Rochdale is rubbish. Official." added Adam Brennan, 16. Where would they go now? "Chicken Cottage," said one.

McDonald's said it has 1,200 restaurants in the UK and had closed just four this year – in Rochdale, Hemel Hempstead, Kirkcaldy and Bridlington – but had other outlets in each of those towns. It had also opened nine new restaurants. "The high street environment continues to change and opening, closing or relocating restaurants enables us to take an integrated, focused and strategic approach to future growth," it said.