Morningstar on Steve Easterbrook’s Turnaround Efforts at McDonald’s

From Morningstar’s Restaurant Rundown on what McDonald’s CEO Steve Easterbrook has been doing to turnaround the company’s operational misques.

The company has a new CEO. What is he doing to get the company back on track?

Hottovy: The most interesting things that Steve Easterbrook has done since taking over are changing the organizational views about accountability and being more customer-centric. Those things give us conviction that a turnaround is possible.

Easterbrook reorganized the company into four segments based on the maturity and the competitive position of their markets, which has also led to rapid improvements in the level of communication and cohesion among executives, franchisees, and suppliers.

This has been most apparent in what the company’s calling its international lead markets, which are Australia, Canada, France, Germany, and the United Kingdom. Innovations there are establishing a blueprint for more sustainable growth across the entire system.

For example, in France they’ve rolled out what they call the full restaurant model, which combines a number of different ordering technologies, whether it be kiosks or touchscreens, or just even at the counter. They’ve got a number of ways to customize burgers, chicken sandwiches, and salads. Then, there is also the in-restaurant experience, whether it be Wi-Fi, pickup at the counter, or table delivery. The full restaurant model has done really well in that market. It’s a success that could be brought to the United States.

In the United States, what’s important is that the company has decided that it’s not a one-size-fits-all market. What works in Chicago may be different from the Northeast or the West Coast.

Then, there is the recent launch of the all-day breakfast platform. It’s not necessarily the all-day breakfast platform doing well that’s got me excited. It’s the fact that they were able to roll that out from a test market to nationwide in just over six months. That’s something that we hadn’t seen under the previous management team, where it was a much more drawn-out process. Sometimes, we’d see products either delayed or outright canceled. That quick time frame gives me confidence that this can be a much more nimble company.


Restaurant Rundown (Morningstar Advisor)

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