McDonald's to See More Executives Announcing Exits
October 16 2016 - 9:50PM
Dow Jones News
More senior executives are slated to say they are leaving
McDonald's Corp. this week as the burger giant reshapes its
leadership team in an apparent effort to revive sales.
Karen King, the company's chief field officer, plans to retire
at year-end. Ms. King, 60 years old, is in charge of overseeing
more than 14,200 McDonald's restaurants in the U.S.
Erik Hess, 51, a senior vice president of customer experience
focused on menu and strategy and insights, is also planning to
retire.
"While Karen and Erik will be greatly missed, their retirements
provide an opportunity to change our organizational structure to
further enhance our connectivity with our owner-operators and our
customers," a McDonald's spokeswoman said.
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 back from retirement in 2014
to help improve the 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 the
high-growth markets division, and Chief Administrative Officer Pete
Bensen—also recently said they would leave the company. Mr. Bensen
is retiring and Mr. Hoffmann became president of Dunkin' Donuts
U.S. and Canada.
McDonald's is trying to turn around its U.S. business, where the
introduction of all-day breakfast last fall fueled recent sales
growth until a second-quarter slowdown. 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 chief executive of McDonald's in
March 2015, has tried to make the chain relevant again to consumers
who executives say have gravitated toward competitors offering
fresher ingredients and custom-made meals. Young customers, in
particular, have turned to so-called 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, joined 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
noncompany veteran to hold such a high post at a company known for
its deep bench of internal talent. McDonald's normally promotes
from within.
The top executives who had reported directly to Ms. King and Mr.
Hess now will report directly to Mr. Kempczinski, who will become
McDonald's USA president on Jan. 1, the McDonald's spokeswoman
said. Charlie Robeson will take on expanded responsibilities as
U.S. chief restaurant officer, overseeing operations of McDonald's
company-owned restaurants, franchising and restaurant
modernization.
Mr. Easterbrook's plans to change perceptions of the burger
giant also include switching to cage-free eggs and chicken free of
certain antibiotics, as well as removing preservatives from 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 the company's headquarters to downtown Chicago
from its longtime home in suburban Oak Brook, Ill.
"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 21:35 ET (01:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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