McDonald's CEO steps down as sales decline

[webfact]

McDonald's CEO steps down as sales decline
By CANDICE CHOI

NEW YORK (AP) — McDonald's CEO Don Thompson is stepping down as the world's biggest hamburger chain fights to hold onto customers and transform its image.

The company said Thompson, who has been CEO for two-and-a-half years, will be replaced by Steve Easterbrook, a company veteran who rejoined McDonald's as its chief brand officer in 2013.

McDonald's Corp., which has more than 36,000 locations around the world, is struggling amid intensifying competition and changing attitudes about food. Customer traffic at established locations in the U.S. fell 4.1 percent last year, following a 1.6 percent decline in 2013. It's also trying to recover after a supplier scandal in China that damaged its reputation.

On Wednesday, McDonald's said Thompson will retire March 1 after nearly 25 years with the company. Thompson, 51, was the first African-American to head the company since it was founded in 1955.

"It's tough to say goodbye to the McFamily, but there is a time and season for everything," he said in a statement.

A representative for McDonald's said an unspecified number of employees at the company's headquarters in Oak Brook, Illinois and elsewhere were also notified of layoffs on Wednesday. In after-hours trading, shares of McDonald's jumped 3 percent to $91.79. The stock has declined about 6 percent in the past year while broader markets are up in the double digits.

With Easterbrook's promotion, McDonald's is continuing its tradition of promoting from within, noted Darren Tristano, a restaurant industry analyst with Technomic. That could be a drawback for a company that is struggling to keep up with a rapidly changing industry.

"Sometimes, you need fresh perspective," Tristano said, adding that the competition has been "evolving faster than McDonald's products have been."

Despite the pressures McDonald's is facing, the timing of Thompson's departure was a bit of a surprise considering the numerous revitalization efforts the company recently announced, said Richard Adams, a consultant for McDonald's franchisees. And he noted the CEO change leaves open the question of whether McDonald's will shift course on those initiatives.

"Is everything going to change, or are Don's plans going forward?" Adams said.

Here's a look at the challenges Easterbrook, 48, will inherit as McDonald's new CEO, and the changes that are already under way.
___

FAST FOOD IS JUNK FOOD

McDonald's is trying to shake perceptions that fast-food is cheap, greasy and made with mysterious ingredients.

To dispel myths about its food, the company recently launched a campaign inviting people to ask frank, sometimes squeamish questions about its menu offerings, such as "Does McDonald's beef contain worms?" and "Do McDonald's buns contain the same chemicals used to make yoga mats?"

Part of the problem for McDonald's and other traditional fast-food chains is that people are gravitating toward food they feel is more wholesome or made with higher quality ingredients. And newer places like Chipotle and Panera are positioning their food as just that.

Mike Andres, president of McDonald's USA, said last month that the company is looking at shrinking the number of ingredients it uses and employing different cooking procedures to enhance the appeal of its food.

"Why do we need to have preservatives in our food?" Andres asked. "We probably don't."
___

BLOATED MENU, CLUMSY SERVICE

McDonald's has conceded its menu in the U.S. has gotten bloated. In just the past decade, the company has said it added 100 items to its menu. That slows down service because it takes customers longer to figure out what they want, while also complicating kitchen operations.

It also increases the chances that orders will be wrong.

As such, McDonald's has said it's looking at a simplified menu that reduces the number of Value Meals, and trims items that may be repetitive, such as variations of the Quarter Pounder with different toppings.
___

PICKIER CUSTOMERS

The ability to customize orders is gaining popularity. At Chipotle, for instance, people like that they can walk down a line and dictate exactly what goes into their bowls and burritos.

In hopes of giving customers more flexibility in adjusting their burgers, McDonald's rolled out new prep tables that can hold more condiments and toppings. It also has more dramatic plans in the works.

McDonald's says it will roll out an option that lets people build their own burgers at 2,000 of its more than 14,000 U.S. locations later this year. The food takes a bit longer to prepare, but the company is hoping customers will think it's worth the wait.
___

PRICES TOO HIGH

A major attraction of McDonald's is that the food is supposed to be affordable. But prices have gotten a bit high for some people.

The popular Dollar Menu is one reason for the skewed prices. To offset the deals on that menu, McDonald's has admitted that other parts of the menu got too expensive.

In turn, the company has said that prompted people to "trade down" to the Dollar Menu. And that left many customers associating the McDonald's brand with its cheapest items.

Affordable food is also more widely available elsewhere, with convenience stores and supermarkets expanding their prepared food and coffee offerings.


-- (c) Associated Press 2015-01-29

[zaphod reborn]

The sales have mostly fallen off in the US. Nowhere do they blame this on the poor image created by McDonalds' mistreatment of its workers. Most of the fast food labor unrest has been pinned to McDonalds. Successful F&B franchises like Chipotle and Starbucks have good reputations as employers. A recent federal court decision is allowing labor complaints to proceed against the corporation, and not be limited to the franchisees. McDonalds would be better off improving its employee relations and doing some PR repair of its tarnished image. I don't think the unhealthiness of the food is the problem, as up and coming burger franchises like In-N-Out, 5 Guys, Shake Shack and Sonic are experiencing sales growth.

[HeijoshinCool]

Micky D's was great when I was a kid. Just a few items, all quality. Burgers, fries, shakes.

But people are wising up to what McDonalds has become.

When your french fries consist of nineteen, count 'em, nineteen ingredients, they can't be good for you.

[A1Str8]

Junk food is so yesterday.

[NeverSure]

I always considered MacDonalds to be at the bottom of the food chain, pardon. I always thought of it as the place you took a bunch of kids. It's not where I would go to eat.

[Choctastic]

I think they need to change their mascot...

[car720]

The sales have mostly fallen off in the US. Nowhere do they blame this on the poor image created by McDonalds' mistreatment of its workers. Most of the fast food labor unrest has been pinned to McDonalds. Successful F&B franchises like Chipotle and Starbucks have good reputations as employers. A recent federal court decision is allowing labor complaints to proceed against the corporation, and not be limited to the franchisees. McDonalds would be better off improving its employee relations and doing some PR repair of its tarnished image. I don't think the unhealthiness of the food is the problem, as up and coming burger franchises like In-N-Out, 5 Guys, Shake Shack and Sonic are experiencing sales growth.

Like all of these types of companies they make one major mistake and that is to believe that all customers of anything whatsoever are complete idiots. For a while people were befuddled by their smoke and mirrors technique but slowly they realised that there overall strategy was more sinister than first thought.

They were really no different from a run of the mill pedaphile. They wanted the kids. Hook line and sinker. They didn't want the parents, they wanted the kids who would be parents of kids next and would see nothing wrong with addicting their kids to this rubbish. Look at the obesity in kids today.

If a drug pusher did what they did they would be either shot or imprisoned for life.

They schemed on entire future generations and while they succeeded for a while it didn't take long for thinking people to realise what they were doing. Now it has come home to roost. They scammed and they conned and people got sick of it.

No matter what they do now they will never make a come back. People will not fall for it twice.

[ChoakMyDee]

Their food is terrible. If you want a fast food burger and fries etc., there are a myriad of burger joints far better like: Burger King, Wendy's, A&W, Sonic, Whataburger etc. etc. MacDonalds is at the very bottom of the list. The only reason to go to MacDonalds would be because it is a cheap place to feed a family but it isn't. Their prices have shot up through the roof in the last few years. Terrible food and too expensive. How is it that they don't know this? You would think as they are losing money that they might want to ask the people on the street why they don't eat there any more.

[csabo]

"up and coming burger franchises like In-N-Out, 5 Guys, Shake Shack and Sonic are experiencing sales growth."

This says it all. If a Mickey D's and a 5 Guys were right next to each other, no one would take a cold 2oz burger out of a warming tray over a hot juicy burger cooked right in front of you, then served just how you like it. The R&D team at MD's should have seen this coming the second they saw these other franchises opening multiple locations. They were to busy trying to jump on Starbucks coat tails with McCafe and they other burger joints got a head start. A recent poll of 7000 burger lovers divided the nation this way as to favorite burgers.

[rijb]

I hate cold fries. And they seem to specialize in them.

[Ulysses G.]

Micky D's was great when I was a kid. Just a few items, all quality. Burgers, fries, shakes.

Really doubt if the quality has gone down, but we were kids and hadn't been eating there for 60 years already. There are better choices now and I am bored with McDonald's.

[impulse]

"up and coming burger franchises like In-N-Out, 5 Guys, Shake Shack and Sonic are experiencing sales growth."

This says it all. If a Mickey D's and a 5 Guys were right next to each other, no one would take a cold 2oz burger out of a warming tray over a hot juicy burger cooked right in front of you,

$3.50 for a Happy Meal, or $12 for a 5-Guys burger, fries and ice tea. Hardly a fair comparison.

5 Guys is growing because they haven't saturated the market yet. Give 'em time.

Now, In-N-Out Burger? Fair comparison and my choice over McD's or 5 Guys.

Honorable mention goes to Whataburger, because you can get a burger 24/7. No waiting until breakfast is over. (Plus, their breakfast tacos are a treat)

Edited January 29, 2015 by impulse

[HeijoshinCool]

Micky D's was great when I was a kid. Just a few items, all quality. Burgers, fries, shakes.

Really doubt if the quality has gone down, but we were kids and hadn't been eating there for 60 years already. There are better choices now and I am bored with McDonald's.

.

I'd have to disagree.

In the 60', the food may not have been the epitome of fine cuisine or healthy eating, but it wasn't created in a lab by guys in white smocks.

You might have already have seen it, if not, Super Size Me is a great flick.

[Ulysses G.]

I have seen it, but it is based on a faulty premise to make it sensational. Other people have done the same thing, but did not stop exercising and only ate when they were hungry (not when someone asked if they wanted to "supersize) and they LOST weight. .

[chuckd]

We had Fuddruckers and Burger King in Saudi that were quite good.

McDonalds as well but not the same, quality wise.

[HeijoshinCool]

I have seen it, but it is based on a faulty premise to make it sensational. Other people have done the same thing, but did not stop exercising and only ate when they were hungry (not when someone asked if they wanted to "supersize) and they LOST weight. .

.

Okey-dokey.

But I don't think the typical McDonald's patron only eats when hungry, or is remotely aware exercise exists.

Go into one in the States at lunchtime: you'll see the drive-through lane backed up twenty cars, and one person standing in line inside.

[maidee]

i hope more & more people inform themselves what goes into that crap

but also many crap in the supermarket

full of chemicals that make you sick

cardboard with msg, sugar & salt

[impulse]

We had Fuddruckers and Burger King in Saudi that were quite good.

I'd camp out to be first in line at a Fuddruckers if they opened up on Sukhumvit. (Well, not really camp out, but they're that good)

I'm not a big fan of McD's employment practices, but they're not the major problem. Fast food jobs were never intended as careers. When I was a kid, only kids worked there. High school kids and gap year kids- and one adult manager. Rarely, a senior citizen would pop up asking me if I want fries with that burger. They were working for spending cash, (on the dole from Mom and Dad). They weren't raising families and trying to buy houses and paying medical bills.

It's a sad commentary on the economic (jobs) situation that flipping burgers at McD's is the best only career a lot of people can find nowadays.

What I do like about McD's is their process. They can take anyone off the street and have them part of a fine tuned machine in a few days' training. Sadly, they've saturated the market in most US cities, and the store they build on 10th street will draw business from the one on 8th street and the one on 12th. Tough to grow revenue with that kind of penetration.

Edited January 29, 2015 by impulse

[MJP]

"It's tough to say goodbye to the McFamily, but there is a time and season for everything," he said in a statement.

[englishoak]

If they went bust the world would be a whole lot healthier and a lot better off from not ingesting their overpriced crap pretending to be food.

Looking forward to a world without that Sh** in it.

Edited January 29, 2015 by englishoak

[MJP]

If they went bust the world would be a whole lot healthier and a lot better off from not ingesting their overpriced crap pretending to be food.

Looking forward to a world without that Sh** in it.

Grilled chicken kebab with salad is about the best fast food going. Put it in a wholemeal pitta. Low fat low carb sauce.

Nothing better.

Where's Costas?

[englishoak]

If they went bust the world would be a whole lot healthier and a lot better off from not ingesting their overpriced crap pretending to be food.

Looking forward to a world without that Sh** in it.

Grilled chicken kebab with salad is about the best fast food going. Put it in a wholemeal pitta. Low fat low carb sauce.

Nothing better.

Where's Costas?

I drink the coffee thats about it but yea the reformed chicken chunks and salad is about as good as it gets there

PS its a lot less .... umm stressful on this forum eh ?

Edited January 29, 2015 by englishoak

[MJP]

If they went bust the world would be a whole lot healthier and a lot better off from not ingesting their overpriced crap pretending to be food.

Looking forward to a world without that Sh** in it.

Grilled chicken kebab with salad is about the best fast food going. Put it in a wholemeal pitta. Low fat low carb sauce.

Nothing better.

Where's Costas?

I drink the coffee thats about it but yea the reformed chicken chunks and salad is about as good as it gets there

PS its a lot less .... umm stressful on this forum eh ?

Innit just.

[Thai at Heart]

Noticeable in the uk that inflation is eating into the burger sizes.

Its a not quite so Bigmac these days. Plastic food that serves a purpose.

[EyesWideOpen]

Their food is crap now , that is why people have stopped going. Fifty years ago.

a big mac was actually pretty good. However now it is inedible. Think the bean

counters took over, and started to cheapen here and there, until nothing is left.

If you took a McDonalds burger, and took out only the patty after scrapping

everything off of it and eating it, you would have a hard time identifying it as beef...

[Benmart]

Junk food is so yesterday.

Yesterday is often history in the making.

[zydeco]

No mention of who McD's has marketed to over the past couple of decades. Used to be, back in the 70s and 80s, it was sold as a place for families, especially with young children. Of late, it has deliberately chosen to seek an "urban" clientele. McDonald's essentially became ghetto food. Too many videos going around, too, of "urban" costumers assaulting each other and beating up people so they can move to the front of the line. I've never eaten at a McDonald's in my life. And with today's image--the restaurant of choice for the would-be gangsta--I never will.

[Ulysses G.]

Their food is crap now , that is why people have stopped going. Fifty years ago.

a big mac was actually pretty good. However now it is inedible. Think the bean

counters took over, and started to cheapen here and there, until nothing is left.

If you took a McDonalds burger, and took out only the patty after scrapping

everything off of it and eating it, you would have a hard time identifying it as beef...

I don't think so. Even as a very young kid, I remember that the beef had no taste. The cheese and all the condiments gave it all its taste. It is the same now.

[HaleySabai]

Micky D's was great when I was a kid. Just a few items, all quality. Burgers, fries, shakes.

But people are wising up to what McDonalds has become.

When your french fries consist of nineteen, count 'em, nineteen ingredients, they can't be good for you.

...its funny how we think everything was so great when we were kids...no,we were eating crap then...and just didn't know it, neither did our parents. The only difference is that the kids are eating pure S*%T now and their parents do know it.

Of course there are many factors to the decline in sales for fast food,I think influential dynamics can be found within these topics;

The global Yoga craze has been significant towards re-defining diet and health trends for women,who have major purchasing power and influence in retail markets. Just checkout LuLu Lemon, the owner became a billionaire from selling yoga pants !

The internet and more recently the phenomena of Social Media has become a profound source of influence through current information and opinions about everything under the sun....this alone has messed up the intent of traditional marketing and advertising leaving the industry with a serious struggle for attention in an increasingly fragmented society.

But still,nearly every time I drive pass a McDonalds it's packed with drive through and sit down customers...as the old saying goes "the mainstream is mindless" and it will always go for what it knows.

In the bigger picture perhaps the tyrannical clutches of corporate despotism -the template that supports the evil empire of big boxes,big burgers,big pharma and big brother is finally flying apart - Thats a good thing!...lets hope.

Edited January 30, 2015 by HaleySabai

[impulse]

Of course there are many factors to the decline in sales for fast food,I think influential dynamics can be found within these topics;

I don't think there's an overall decline in sales of fast food. I just think it's spread over a lot more competitiors. When I was a kid, there was McDonalds, Burger King and White Castle.

Now, there are dozens of national chains, and more expanding with cheap Fed money.

Edited January 30, 2015 by impulse