OAK BROOK, IL - The list of people who are 'Lovin’ It' is growing much shorter in recent days, and McDonald’s CEO Steve Easterbrook has taken notice.
The credit agency Standard & Poor’s downgraded its rating on McDonald’s from ‘A’ to ‘A-’, and McDonald’s shares were down to 1.7% at $96.13 after the fast-food chain unveiled its turnaround strategy. The company cites operational changes in its future but has yet to combat what many are saying is the real problem: People just don't like McDonald’s menu anymore.
“No business or brand has a divine right to succeed, and the reality is our recent performance has been poor,” Easterbrook admits in a company video Monday morning. “The message is clear. We are not on our game.”
According to the Washington Post, most stores have seen plummeting customer attendance for the past two years. The Post reports that in the first three months of the year, sales fell about 3 percent and profit fell 32 percent.
The country’s eating habits are changing towards places where food is perceived as “more fresh,” the Washington Post says, and McDonald’s has been struggling to adapt. “Fast Casual” kings like Chipotle Mexican Grill and Panera Bread are growing more and more popular while traditional fast food chains fade away.
"The immediate priority for our business is restoring growth under a new organizational structure and ownership mix designed to provide greater focus on the customer, improve our operating fundamentals and drive a recommitment to running great restaurants,” Easterbrook said in a press release. “As we turn around our business, we will look to create more excitement around the brand and ensure that we build on our rich heritage of positively impacting the communities we serve."
One way McDonald's is trying to revamp its image is through its new corporate structure that will be led by Mike Andres, who will continue to serve as President; McDonald’s U.S., Doug Goare, currently President McDonald’s Europe, will become President of International Lead Markets; Dave Hoffmann, currently President of McDonald’s Asia/Pacific, Middle East and Africa (APMEA) will become President of High-Growth Markets. Ian Borden, Currently Chief Financial Officer of the APMEA region, will become President of Foundational Markets.
Other highlights from McDonald’s press release include:
- Refranchising 3,500 restaurants by the end of 2018
- Accelerating the pace of refranchising from 81% to about 90%
- Deliver approximately $300 million in net annual G&A savings by the end of 2017
- Return $8 to $9 billion to shareholders in 2015 and reach the top end of its 3-year $18 to $20 billion cash return by the end of 2016
- The company will begin testing all-day breakfast in California
- McDonald's claims it will stop buying chicken treated with antibiotics
- Planning to close about 700 of its more than 36,000 worldwide stores this year
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