McDonald's new leadership searches for menu hits
In July 2012, in his first quarterly earnings conference call as CEO, Don Thompson put his faith in a three-pronged strategy to bring McDonald’s up to date and beyond. “By remaining committed to our long-term strategies to optimize our menu, modernize the customer experience and broaden accessibility to brand McDonald’s while continuing to fortify our short-term plans, I’m confident we will continue to grow the business for the system and our shareholders,” Thompson said then.
It was a mistaken definition of “optimize” that led, at least in part, to Thompson’s departure this week, replaced by Senior EVP, Global Chief Brand Officer Steve Easterbrook. Had Thompson and McDonald’s understood sooner that the optimal McDonald’s menu was smaller and more streamlined rather than eclectic and ungainly, he might have gotten longer than two-and-a-half years to see if his vision for the “experience of the future” really would turn around the brand.
“Optimizing the menu” required short-term answers and McDonald’s didn’t have enough of them, in the U.S. at least. There’s irony in the introduction by McDonald’s Canada of a Double Big Mac just as Thompson stepped down. The Double Big Mac is just the sort of unflashy but fun menu item the chain needs: a core product that can make some news and not overly complicate operations. The Thompson years saw problems with chicken wings that were overpriced, elimination of the Angus Third Pounders and the addition of time-consuming Premium Wraps that slowed service times.
Read the comments to the earlier McDonald’s post. There is some smart thinking there about the chain’s need to focus on reestablishing consistency and to stop being bullied into continually remaking the menu to please nutritionists’ unreasonable demands.
Although he was global chief brand officer, Easterbrook is not by background a marketing man. That’s good because McDonald’s needs to look at how to deliver high-quality food to everyone at its counter or drive-thru. After that it can worry about being digital enough in its communications strategies. If Millennials don’t like McDonald’s food, a cool phone app or the chance to customize a burger on a touch screen won’t change their buying habits.
Scott Rothbort, Seton Hall University Stillman School of Business Finance Professor and Chief Market Strategist, sent me a comment on the Thompson ouster, arguing that “McDonald’s not going far enough” because it once again pulled from its bench. He said he’s been arguing for Thompson’s ouster but “I was calling for that replacement to come from outside of McDonald’s as the company needs a fresh, new and independent leader. So, to some extent, the announcement yesterday was welcome, but only went halfway.”
I don’t agree. I don’t think McDonald’s can afford the time for an outsider to learn the ropes and dissect the problems anew. Easterbrook began his McDonald’s career in 1993 as a financial reporting manager in London. He handled various operation roles until 2007 when he was named SVP and Division President, Northern Europe. In 2010 we became president of McDonald’s Europe. He left McDonald’s in 2011 for stints atop the PizzaExpress LTD and Wagamama LTD restaurants chains before returning to the Arches in 2013.
McDonald’s UK operations with which Easterbrook is familiar have fairly steady performers. Yes, investments have been made in digital engagement (witness the recent“Hackathon” in London), but it also has managed to balance a low-price-point Saver Menu with higher-price LTOs and the My Burger initiative that invites consumers to dream up the next McDonald’s menu star. McDonald’s doesn’t need to be fancy or digital or Millennial or nutritional. It needs to be good. It needs to be McDonald’s. Optimize that.
