McD’s CEO Gets Grilled and Then Toasted

Discussion
Jan 17, 2003
George Anderson

By George Anderson


By most accounts, Jim Cantalupo, chief executive officer, McDonald’s, under-whelmed the investment community with his first public comments on turning the fast-food giant’s fortunes around.


A Chicago Tribune article said Mr. Cantalupo’s comments were “reminiscent of predecessor Jack Greenberg, who departed as chief executive early after failing to produce a promised turnaround in the US.”


So, what did Mr. Cantalupo say that would ignite a sell-off of McDonald’s stock? The company’s shares fell more than 5 percent yesterday, following Mr. Cantalupo’s comments.


The McDonald’s chief executive voiced his support for continuing the Dollar Menu while hinting, says the Chicago Sun Times, the company would “remove premium sandwiches such as the Big N’ Tasty from the value-oriented dollar menu.”


Other elements of Mr. Cantalupo’s plans to turn McDonald’s around include:


Seeking growth at a sustainable pace

McDonald’s is expected to scale back new store openings in the US and abroad. The chain is likely to seek store closings here and in Japan.


‘Some people have … concluded that opening restaurants is our problem. I disagree. Our challenge is not new restaurants. … Our challenge is building sales and rebuilding margins in our existing restaurants–thus, our sharp focus on improving operations.’


Increasing the number of McCafe coffee shops
USA Today reports that Mr,
Cantalupo sees the concept as “a relevant thing to moms with kids.”


Modeling the company based on the French experience

Mr. Cantalupo’s heir apparent and the new president of McDonald’s, Charlie Bell, spoke admiringly of what the chain is doing in France. “They’ve kept the brand fresh and modern,” he says.


Improving the quality of the chain’s advertising efforts

Mr. Cantalupo’s assessment of the advertising produced for the chain was substantially less than a show of support for the agencies handling McDonald’s business. He said, “Our marketing in recent years has not been as relevant or compelling as it needs to be.”


Moderator’s Comment: What is your evaluation of Jim
Cantalupo’s preliminary planning for turning McDonald’s around?


One of the smartest things that Mr. Cantalupo did at his
public flailing was to announce that McDonald’s would no longer provide quarterly
forecasts to measure progress. “We’ll gauge our success by the degree of improvement
in comparable sales, margins and returns. “I don’t believe thinking in terms
of quarterly targets is productive.”
[George
Anderson – Moderator
]

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