franchisee-owned—bringing
it closer to competitors such
as RBI (Burger King, Popeyes)
and Yum! Brands (Taco Bell,
KFC), which are working
toward being, respectively,
100 percent and 98 percent
franchisee-owned.
Why is this important?
For one, it’s more efficient
to let franchisees run stores,
freeing up operating income
and insulating the company,
at least somewhat, from risk.
According to Sara Senatore,
a senior analyst at Sanford
C. Bernstein, the New York–
based investment manage-
ment firm, this shift “typically
has positive implications
for the company’s financials
over time. It generates higher
returns on capital, and it
tends to lower the volatility
around their revenues.” And
indeed, McDonald’s expects
the new strategy to help
save $500 million by the end
of 2018 and make good on
the $22 billion to $24 billion
cash return it promised to
shareholders by 2019.
But it’s also key to Easter-
brook’s vision of McDonald’s
becoming faster and more
adaptable—to not only
implement new changes but
also make sure they’re imple-
mented effectively. Local
operators, after all, are the
best judges of when and how
to introduce new products
and protocols to their local
communities. “By tapping
into the entrepreneurial spirit
of our [franchisees], they are
going to help us go at a much
faster pace than we would be
able to do on our own,” says
Chris Kempczinski, president
of McDonald’s U.S. business.
EASTERBROOK often talks
about his “modern progres-
sive burger company,” both
on earnings calls and in
interviews. Some industry
onlookers have described the
phrase as corporate-buzzword
lingo, but Easterbrook says
that misses the point. Those
words are for his staff. “The
rallying call of ‘modern pro-
gressive burger company’ was
about giving us the confidence
around understanding who
we are, and being proud about
who we are,” Easterbrook
says. His customers first seek
value and consistency, he says,
not necessarily a finer dining
experience or a menu dotted
with health food. But even if
diners are coming in for what
they know, what they know
could use some improvement.
“It’s not about being a different
McDonald’s; it’s about being a
better McDonald’s.”
In other words, it’s about
focusing on what McDonald’s
customers love most—and
apparently, that’s breakfast
and discounts. After much
clamoring from consum-
ers, McDonald’s launched
all-day breakfast in October
- The transition had its
hiccups; some McDonald’s
stores, for example, couldn’t
offer both biscuits and
McMuffins at the same time