Responding to the continuously slumping sales in all major markets including the US, McDonald’s CEO and President Steve Easterbrook announced May 4 the company’s restructuring plan.
In the live webcast yesterday, he named the three new priorities of the McDonald’s management, such as: driving operational growth, returning excitement to the brand and unlocking financial value.
First off, all international markets will be split into four categories, listed from the most to least important in descending order:
- The US—the company’s largest market that accounts for over 40% of annual operationa income.
- International lead markets—these are the established markets that account for another 40% of all company’s income collectively: Australia, Canada, France, Germany and the U.K.
- High-growth markets—the ones with higher restaurant expansion and franchising potential, such as China, Italy, Poland, Russia, South Korea, Spain, Switzerland and the Netherlands. They account for 10% of annual income collectively.
- Foundational markets—all the rest.
The new operating units will be led by newly promoted top managers. Mike Andres will continue to serve as President McDonald’s U.S.; Doug Goare, currently President McDonald’s Europe, will become President International Lead Markets; Dave Hoffmann, currently President McDonald’s Asia/Pacific, Middle East and Africa (APMEA), will become President High-Growth Markets; Ian Borden, currently the Chief Financial Officer McDonald’s APMEA, will become President Foundational Markets.
Mr. Easterbrook also announced the plan to open 3,500 new units by the end of 2018 under the franchising scheme to increase its percentage from 81% to 90% globally.
McDonald’s now operates more than 36,000 restaurants around the world. In 2014, McDonald’s sales were the worst in the past 12 years—in the U.S., specifically. The company’s rating by Standard & Poor’s was recently down from ‘A’ to ‘A-‘.
On the brighter side of things, McDonald’s Hungary in collaboration with their creative agency DDB Budapest have designed a bag that transforms into a cardboard tray easily by tearing off a perforated slip of paper at the bottom. At this time, there is no information whether this concept will be implemented in other international markets.