McDonald’s decision to elect global brand chief Steve Easterbrook to replace Don Thompson as chief executive will not resolve all its problems outright but it could be the first step to break from the outdated strategies that have held it back.
The restaurant described its incoming boss as someone who can "effectively lead the company to improved financial and operational performance". While Easterbrook is a marketer at heart, McDonald’s statement singles out his management expertise as the key to realising the customer-orientated focus Thompson had paved the way for.
Recipe for growth
In particular, it would seem the board were impressed by his transformation of the UK and European businesses, with the former now in rude health in contrast to struggles elsewhere. Before he assumed responsibility for the region it was one of its worst performing developed markets, suffering from quality perceptions and growing competition from rivals such as Costa Coffee and Pret a Manger. He ramped up consumer research and overhauled the design of its existing restaurants to lift perceptions all the while restabilising a brand purpose that would drive additional visits.
The UK’s turnaround is a microcosm of the company’s global problems, serving as Easterbrook’s proof of concept for a customer-led strategy capable of driving commercial gains relatively fast. Following the UK, he moved on to more senior roles across the company including European president before becoming its first global brand officer in 2010.
However, it has not all been plain sailing between Easterbrook and McDonald’s. The two parted ways, just months after he became its top marketer, to become chief executive of rival Pizza Express. He then went on to take the same position at Japanese noodle restaurant Wagamama before returning to the business in 2013 to the same role he left.
It would appear the bosses at McDonald’s closely monitored Easterbrook’s actions away from the business, particularly at Wagamama where he pushed it into new markets. At the time he joined the noodle business in 2012 it operated 84 restaurants and now it has around 140.
This ingenuity and understanding of customers is what McDonald’s marketing and wider business plan has admittedly lacked for the past 18 months. Thompson has bemoaned the marketing errors made during the economic downturn when the business prioritised short-term margins rather than focus on long-term customer insights.
The company is racing to right these wrongs, chiefly through a revamp of its long-running “I’m Lovin It” brand strategy designed to liken the feeling the brand invokes in customers to the love people share with each other every day. It is a calculated gamble by the business, which needs to translate the customer-orientated principles from its marketing to other parts of its sprawling business, covering everything from staff training to technology to in-store design.
Marketing's impact in the boardroom
The need to connect marketing to the wider business speaks to the brand and organsiational expertise Easterbrook has amassed during a 20-year career at the chain. McDonald’s desperately needed to change something and while Easterbrook does not guarantee success, he does give the customer stronger presence in a boardroom where product has been king.
His ascension to the summit of the business spotlights the ongoing debate around the impact marketing has in the boardroom. Marketers are a company’s direct link to consumers but have struggled to consistently translate that into sales.
But Easterbrook has proved it can be done at scale in a sustainable way, which will be pivotal to McDonald’s attempts to combat poor sales. Global sales fell 1 per cent for the year and 9 per cent in the quarter, compounded by the company haemorraging customers in the US. Sales in its domestic market are predicted by Nation’s Restaurant News to have actually declined in 2014, marking the first annual decline.
Given its size, McDonald’s turnaround will take time. Unlike recent efforts however, there is a clear long-term strategy in place and in Easterbrook it has a leader capable of putting management back in touch with consumers whose tastes have shifted away from the brand’s heartland of cheap, fast food.