Industry analysts have praised McDonald’s for naming someone from outside Oakbrook, someone with a fresh perspective. One of his main credentials, they say, is his global experience
Chicago-area corporation was in no danger of losing its status as the world’s most iconic fast-food chain. But the proliferation of competitors in the fast-food sector, the growing popularity of so-called fast-casual chains and consumer demand for fresher, purer food were taking their toll. In her recent annual report on McDonald’s, Elizabeth Friend, Euromonitor International’s consumer food-service strategy analyst, put it well: “While the company remains strong in many ways … the landscape in which it is competing has evolved beneath its feet.” While McDonald’s was still making money, its rate of revenue
growth had been deteriorating. According to Euromonitor data, while system-wide sales were up by 6.4% in 2011 compared to 2010, that number had dropped to 2.8% by 2014, which meant that the company was growing less than half as fast. In Canada, the growth rate fell to 1.1% in 2014 from 7.1% in 2009. Most painful perhaps to the folks at headquarters in Oakbrook, Ill., was that US comparable sales actually declined by 2% in 2014. At the same time the fast-casual market was on the rise, with
players such as Denver-based Chipotle Mexican Grill and St. Louis-based Panera Bread finding success with food that was more handcraſted, less prepackaged. With McDonald’s lagging stock price bringing pressure from investors, it appeared to be time for a change at the top. So industry watchers weren’t sur- prised when the board replaced Thompson. The precise reasons for choosing Easterbrook as his replacement, however, re- mained in the boardroom behind closed doors. Easterbrook declined to be interviewed for this story. What
the North American public knows about him comes mainly from a bio on the company’s website, which notes that the British-born executive is a certified accountant who joined the company in 1993 as a financial reporting manager in London. From there he went on to become CEO of McDonald’s UK, presi- dent of McDonald’s Europe and, most recently, global chief brand officer. Segues along the way included short stints running London-based PizzaExpress and Wagamama Ltd., also of London, which serves Asian food in the style of a Japanese ramen bar. The website says Easterbrook has the goal of “revitalizing McDonald’s as a modern, progressive burger company deliver- ing a contemporary customer experience.” Other tidbits: he is a visiting fellow of the Oxford University Centre for Corporate Reputation and holds a degree in natural sciences from Durham University. Oh, and he played cricket. According to The Guardian story, he was born in 1967, prac- tised accounting at Price Waterhouse (now Pricewaterhouse-
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Coopers) and years later was credited with a turnaround at McDonald’s UK. The new CEO made a video statement to the business com-
munity and worldwide franchisees last year in which he was frank about the company’s need to change: “The reality is our recent performance has been poor,” he said. “The numbers don’t lie, which is why … I will not shy away from the urgent need to reset this business. … This is a global turnaround. We have to modernize our approach and run the system differently.” Unfortunately, his well-intentioned message was said to have
been diluted by a less-than-stellar script and a stiff delivery. That was the view, anyway, of a Forbes contributor who savaged the video as being “mind-numbing” and full of “CEO gobbledy- gook,” going so far as to suggest it be studied by communica- tions professionals as a way not to do it. But perhaps Easterbrook deserves a break. While he has had many years with the company, industry
analysts have praised McDonald’s for naming someone from outside Oakbrook, someone with a fresh perspective. One of his main credentials, they say, is his global experience, particularly in Europe, because European operations have been ahead of North America in meeting consumer demand for regional dif- ferences, animal rights, more natural food and a more upscale presentation. McDonald’s has used cage-free egg production for years in the UK, for instance. Last fall it tested 100% organic beef burgers in Germany. “Europe is an interesting case,” says Friend. “Consumers
there started to demand higher quality in traditional fast food much earlier than we did in North America. In that sense, Easterbrook is a good person to take this on. His job is to figure out a way to make traditional fast food a little more in line with what consumers want right now.” But transforming such a huge company with such deep roots
won’t be easy. There’s the question of what consumers want — and then there’s the question of what consumers want from McDonald’s. Yes, more people want healthier, fresher, more sustainably sourced food, free from animal cruelty. But folks who head for the Golden Arches typically do so because they want food fast and cheap. And there is a point where those two desires diverge. Last year, when McDonald’s announced that it would begin
phasing out eggs laid by caged hens in North America, animal rights advocates rejoiced. But there’s little doubt that cage-free eggs will eventually add to the price of the Egg McMuffin. Not only does it cost more to produce these eggs, but farmers will also be spending big dollars to build new facilities and retrofit
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