McDonald’s Don Thompson announced this week he’ll resign after two years as CEO — two years that were not very successful for the company. Sales at McDonald’s roughly 14,000 U.S. restaurants have slumped.
Sara Senatore, a research analyst with research firm Sanford C. Bernstein, says part of the problem is competition from more “wholesome” competitors, so-called fast-casual chains like Chipotle. “The food is better quality and tends to be higher priced as a result. There’s a real emphasis on provenance, sourcing, local farms,” she says.
McDonald’s also faces image problems with customers who just want a good deal on lunch. Carla Norfleet Taylor at Fitch Ratings says that’s another area where competitors are winning. “Whether it’s Burger King with ‘2 for $5,’ ‘mix and match,’ ‘choose what you want,’ [they’re] just being a lot more creative than what we’re seeing with McDonald’s, I think, on the promotional front,” she says.
Incoming CEO Steve Easterbrook is currently McDonald’s chief brand officer. He’s spearheaded efforts to boost marketing and allow diners to more easily customize their orders. He previously led a successful turnaround in McDonald’s United Kingdom business. He helped dispel worries about food quality, and even took part in a televised debate about the fast-food industry.
Still, Sara Senatore wonders why the chief brand officer will face a brand crisis when he takes over the corner office. “He should’ve had some imprint when there does seem to be an issue with brand resonance,” she says.
Easterbrook takes over on March 1, 2015.
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