McDonald’s restructures markets and renews focus on customer as part of turnaround plan
McDonald’s new CEO Steve Easterbrook said he plans to re-organize the company’s global structure and vowed to ignite excitement around the brand through better customer experiences as the fast-food giant struggles to stay relevant among millennials.
The turnaround plan, which he announced today (4 May), comes as McDonald’s tries to regain footing as it battles sluggish sales and trendier competitors such as Shake Shack and Five Guys.
Easterbrook said he hopes to turn the fast-food chain into a “modern, progressive burger company” by focusing on three main pillars: operational growth, brand excitement, and financial value.
The company will simplify its organizational structure by dividing its business into four main groups – the US market, international lead markets including the UK and Canada, high-growth markets such as China and Russia, and foundational markets throughout the rest of the world – in order to combine restaurants that have similar needs and growth opportunities.
In a statement detailing the future plans, Easterbrook noted: "Our new structure will be supported by streamlined teams with fewer layers and less bureaucracy, and our markets will be better organized around their growth drivers, resource needs and contributions to the company's overall profitability.
“McDonald's new structure will more closely align similar markets so they can better leverage their collective insights, energy and expertise to deliver a stronger menu, service, and overall experience for our customers,” he said.
In addition to these changes, it also plans to cut $300m in costs by 2017, which it said will be aided by “more stringent discipline around spending throughout the organization.”
The company also hopes to refranchise 3,500 restaurants over the next four years to bring its global franchise percentage from the current 81 per cent to 90 per cent, a move chief administrative officer Pete Bensen said will help generate more stable and predictable revenue and cash flow streams.
The hefty turnaround plan is just one of many changes Easterbrook has announced since becoming CEO in March as he tries to revamp the chain. Under his leadership, McDonald’s has also begun testing all-day breakfast at some US locations, announced plans to close down 700 restaurants worldwide, and detailed plans to increase wage raises for non-franchised US employees.
McDonald’s closed its first quarter of 2015 with lackluster results, with sales down 2.3 per cent globally and 2.6 per cent in the US. Revenue fell to 5.96bn, an 11 per cent decrease from the year prior.