MCD McDonalds Corp

By Julie Jargon 

More senior executives are expected to say they are leaving McDonald's Corp. this week as the burger giant reshapes its leadership team in an apparent effort to turn around sales.

Karen King, the company's chief field officer in charge of overseeing more than 14,200 U.S. restaurants, plans to retire at the end of the year. Erik Hess, 51, a senior vice president of customer experience focused on menu and strategy and insights, is also planning to retire, according to people familiar with the matter.

McDonald's representatives didn't immediately respond to requests for comment on the departures.

The departures come after the company said in August that McDonald's USA President Mike Andres would retire at the end of this year. Mr. Andres brought Ms. King, 60, back from retirement in 2014 to help turn around the struggling U.S. business and brought Mr. Hess back from Asia, where he was in charge of strategy. Before Ms. King returned to McDonald's, she had retired from being the east division president of McDonald's USA.

Two other top McDonald's executives -- David Hoffmann, head of McDonald's high-growth markets division, and Chief Administrative Officer Pete Bensen -- also recently said they plan to leave the company. Mr. Bensen is retiring and Mr. Hoffmann became president of Dunkin' Donuts U.S. and Canada.

McDonald's is struggling to turn around its U.S. business in particular, where the introduction of all day breakfast last fall fueled recent sales growth until slowing in the second quarter. Same-store U.S. sales rose 1.8% in the second quarter, far below the 3.2% growth expected by analysts. McDonald's is scheduled to report third quarter results on Friday.

Steve Easterbrook, who became McDonald's chief executive in March 2015, has tried to make the chain relevant again to consumers who executives admit have gravitated toward competitors offering fresher ingredients and custom-made meals. Young customers, in particular, have turned to fast-casual restaurants, including places that serve gourmet, customizable burgers.

Mr. Easterbrook, who describes himself as an "internal activist" intent on challenging "legacy" thinking at the company, appointed a virtual outsider to fill the role Mr. Andres is vacating. Chris Kempczinski, former president of Kraft Foods Group Inc.'s international business, came to McDonald's last year as executive vice president of strategy, business development and innovation. Some former McDonald's executives say it is unusual for a non-company veteran to hold such a high post at a company known for its deep bench of internal talent. McDonald's normally promotes from within.

Mr. Easterbrook's plans to change perceptions of the burger giant also include switching to cage-free eggs and chicken free of certain antibiotics and removing preservatives from popular menu items including Chicken McNuggets.

Mr. Easterbrook is also cutting costs and selling more restaurants to franchisees. He said last year McDonald's will cut $500 million in annual general-and-administrative costs by 2018 and sell 4,000 restaurants to franchisees by that time.

He is also moving McDonald's headquarters to downtown Chicago from its longtime home in suburban Oak Brook.

"The move downtown is representative of a dramatic change. Oak Brook is in our DNA," said one of the people familiar with the executive changes. "I look forward to seeing Steve continue to shake things up. It creates some angst, but I think it's what is needed."

Write to Julie Jargon at julie.jargon@wsj.com

(END) Dow Jones Newswires

October 16, 2016 15:11 ET (19:11 GMT)

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