Can McDonald's New CEO Bring Real Change for the Chain?
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Recently, McDonald's customers haven't been lovin' the brand. Now, the CEO is taking the fall.
On Tuesday, the fast-food giant announced that Don Thompson is retiring as president and CEO, after 25 years at McDonald's. His replacement comes from within the company: Steve Easterbrook, who prior to his promotion was senior executive vice president and chief brand officer, and previously served as president of McDonald's Europe.
"It's tough to say goodbye to the McFamily, but there is a time and season for everything," said Thompson in a statement.
Even though Thompson only became CEO in 2012, the departure is hardly out of the blue. McDonald's same-store sales were down a full 1 percent in 2014, due to a mix of factors including legal battles, customers' growing distaste for traditional fast food, difficulty streamlining the menu and international supplier issues.
Thompson most likely couldn't have directly prevented all of these problems. For example, it's unlikely that the CEO of a 36,000-location chain would be privy to any knowledge about supplier hygiene in Asia. However, Thompson did allow issues such as a lax auditing system and an oversized yet stagnant menu to continue under his leadership.
As CEO, Easterbrook will become the face of a "new" McDonald's, as a number of changes Thompson helped set in motion will be coming into fruition in 2015.
Easterbrook began working at McDonald's in 1993 and held various leadership positions in Europe prior to his current role. While he has deep roots in McDonald's, Easterbrook also brings fast-casual leadership experience to the table. From 2011 to 2013, Easterbrook left McDonald's to serve as CEO first of casual pizza chain PizzaExpress and then the fast-casual chain Wagamama, serving Asian food.
Easterbrook's fast-casual experiences have uniquely prepared him to take over McDonald's as the company attempts to take on fast-casual competitors. Thompson said in an investors call earlier in January that in 2015, McDonald's would be focused on "adapting to the changing marketplace." This year, Easterbrook will lead the company in rolling out the fast-casual friendly "Create Your Taste" platform and attempting to simplify recipes while using higher-quality and localized ingredients.
Still, the question for McDonald's remains: Will Easterbrook be enough of a change to reboot the company's sales? McDonald's has a long tradition of hiring internally. However, an external hire for CEO could be the shock to the system that brings necessary changes to the brand and changes external perceptions of the company.
For better or for worse, the "shock to the system" method isn't in McDonald's playbook, likely in part because the company is so vast that creating purposeful change in all locations takes months or years in planning and execution. Plus, McDonald's still has one of the most recognizable and famous (or, sometimes infamous) brands in restaurant history. Currently, the company is pushing to revitalize its image and sales, while still clinging to the universal recognition the golden arches inspire.
For example, McDonald's latest marketing campaign doubles down on what defines McDonalds: the history of the company, the famous logo and the unapologetically anti-foodie meals. None of these things are new and neither is Steve Easterbrook. It's just a matter of reframing these key ingredients of the brand and finding a way to convince customers that they are indeed what they want.
If the moderate approach to rebranding fails, it might be time for McDonald's to throw out the playbook -- and find a CEO from outside the company. Easterbrook better start executing changes quickly and successfully, or he'll be following Thompson out of the "McFamily."