Image source: McDonald's.
McDonald's CEO Steve Easterbrook assumed leadership of the world's largest restaurant chain in January, and analysts and media watchers have been trying to suss out what the new chief executive means for the future of the Golden Arches. Easterbrook's ascension to the top spot at the Golden Arches after more than 20 years with the company came amid a period of ongoing challenges for the company, promoting curiosity and scrutiny among investors and franchisees as to how the CEO's plan to turn McDonald's into his touted "modern, progressive burger company" will play out.
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While many questions persist about how exactly McDonald's will enact and benefit from its turnaround strategy, the company's most recent quarterly conference call shed some light on the direction that Easterbrook and Co. will pursue. These three quotes from that July 23 conference call help tell the story of thenew direction at the Golden Arches.
McDonald's CEO acknowledges and aims to change negative perceptionsEasterbrook is tasked with returning McDonald's to global sales growth amid emerging competition and lagging brand strength, and he acknowledged during the call that no single measure would put the company back on the right track. The company's image has been hurt by controversies regarding the quality of its ingredients, treatment of employees, and the overall health profile of its menu, and Easterbrook has indicated that thriving in the restaurant market looks to be dependent on reversing stigmas associated with the McDonald's name.
Here's the McDonald's CEO on the need for a holistic approach to improving the brand:
Menu additions are coming, but increasing simplicity is top priorityMcDonald's has put forth a menu revamp as one of the key elements to its turnaround strategy, and has already reduced the complexity of its offerings; however its statements have at times given cause for confusion. In addition to its stated intentions to reduce the complexity of its menu, the company has also discussed expanding its breakfast offerings throughout the day, expanding its Create Your Taste custom burger platform, and increasing the number of regionally specific offerings.
Easterbrook's comments on the company's most recent earnings call have made it clear that the company is prioritizing improvements to the core menu. Here's the McDonald's CEO on the new menu strategy:
Easterbrook went on to say that the company is prioritizing a net simplification to its menu and operations, indicating that potential changes, such as offering breakfast items all day, would be accompanied by alterations to increase simplicity at stores.
McDonald's is slimming its workforce to improve the bottom lineAt the beginning of August, McDonald's announced that it would lay off some 225 workers, with 135 of the workforce redundancies coming from its Illinois headquarters. This move came on the heels of a 63-person layoff at the company's headquarters at the start of 2015.
McDonald's CEO has indicated that more workforce reductions are likely to follow, stating that the company expects it will have achieved half of its annual target of $300 million net savings on general and administrative expenses by the end of next year, with the goal being fully realized by the end of 2017. Here's Easterbrook on the change in workforce makeup:
McDonald's is also looking to cut expenses and raise margins by increasing its share of franchised restaurants. Currently, more than 80% of the company's restaurants are franchised, but the McDonald's CEO sees raising the percentage of franchise-owned stores to 90% as central to his turnaround plan.
Easterbrook has his work cut out for him and customers and investors will want to keep watching as McDonald's works to turn itself around.
The article McDonald's CEO Steve Easterbrook: 3 Quotes Telling the Story at The Golden Arches originally appeared on Fool.com.
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