McDonald’s Corp. said Chief Executive Don Thompson was
leaving, less than three years into his tenure, and promoted a company veteran
to try to revive the fast-food giant from its worst slump in more than a
decade. Steve Easterbrook, 48 years old, who started with McDonald’s in 1993
and is currently chief global brand officer, will succeed Mr. Thompson on March
1, becoming the company’s third CEO in the past decade.
McDonald’s gave no reason for the abrupt retirement of the
51-year-old Mr. Thompson, who has been with the company nearly 25 years. But it
comes after two years of worsening sales declines in its core U.S. market that
have so far defied management’s remedies. Net income last year fell nearly 15%,
to $4.76 billion, and McDonald’s stock has been basically flat since Mr.
Thompson took over in July 2012—a period when the Dow Jones Industrial Average
rose 36%.
Left unclear for now is how Mr. Easterbrook will address the
broad range of challenges McDonald’s faces. In addition to competition from
long-standing rivals like Burger King, McDonald’s is under attack from a host
of smaller, more focused “fast casual” restaurants that are winning younger
consumers with fresher and more customized offerings.
Mr. Thompson’s team, including Mr. Easterbrook, has unveiled a
range of proposed solutions in recent months. It announced last month plans
to eliminate low-selling items from its menu, and to expand experiments
with more customized offerings. This month, McDonald’s launched a new marketing
campaign in the U.S. with commercials and food packaging designed to refresh
its longtime “I’m lovin’ it” slogan.
McDonald’s has a history of promoting within its ranks
rather than recruiting outsiders, which comes with the risk that the changes
won’t be substantial. But some investors and analysts think the potential to
shake up the business is still there with Mr. Easterbrook.
Mr. Easterbrook, who was born in the U.K., has zigzagged
through McDonald’s corporate leadership roles, starting in London as a
financial reporting manager in 1993. He climbed the ranks of its U.K.
operations and in September 2010 was named the top brand officer. After just a
few months, he took over as the president of the company’s European
operations—then left McDonald’s less than a year after that.
Last March, McDonald’s broadened Mr. Easterbrook’s
responsibilities to include oversight for corporate strategy and the restaurant
solutions group, which comprises restaurant design, innovation, training and
other operations. Mr. Easterbrook has been vocal about McDonald’s need to make
itself attractive again to “millennials,” often defined as the group
born between 1980 and 2000, who are now in their midteens to mid-30s. That age
bracket once was a core demographic for the chain.
Mr. Thompson took the helm after nearly a decade of
prosperity led by Jim Skinner. Mr. Skinner became CEO in 2004, in the wake of
McDonald’s last big business downturn. By Mr. Thompson’s appointment as CEO in
March 2012, McDonald’s stock price had nearly quadrupled since 2003 on strong
revenue and profit gains.
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