Posted on 02/13/2015 7:54:45 PM PST by rickmichaels
CtW has called on McDonald’s to remake its board, saying directors of the struggling restaurant chain have been there too long and lack necessary experience.
A group that advises union pension funds has called on McDonald’s to shake-up its board, saying an upcoming CEO change will not be enough to lift it out its doldrums.
CtW Investment’s letter to the restaurant chain’s board Friday comes two weeks after the company announced Don Thompson would step down as CEO and be replaced in March by Steve Easterbrook, its chief brand officer who has been responsible for fixing the fast-food operator’s marketing and menu.
After years of growth, McDonald’s has hit a rough patch: 2014 was the first year with a decline in same-store sales in more than a decade. Last quarter was also the fifth straight quarter of declining same-store sales in the United States, where it has lost many customers because of an overly complicated menu, changing tastes, and defections to fast casual chains like Chipotle Mexican Grill .
The funds CtW advises own 2 million McDonald’s shares, or $190 million at Friday’s closing price and 0.2% of the company, and invest over $250 billion in the global capital markets.
“At this juncture, we believe it is critical for McDonald’s to have strong, independent board leadership,” CtW Executive Director Dieter Waizenegger wrote in the letter. “Fresh eyes are essential to drive the overhaul of the board’s composition, form a productive partnership with CEO Easterbrook in tackling the company’s strategic challenges, and restore the trust of long-term shareholders.”
CtW is calling on McDonald’s MCD 0.59% to come up with and publicly disclose plans to change the board’s leadership, and set up a board succession plan. The group faulted the board for having members who’ve been directors for too long- the average tenure has been 13 years– and for being to insular and tied to Chicago-area networks.
CtW made headlines last year with its opposition to the now concluded merger between Walgreen and Alliance Boots.
CtW said McDonald’s has been “complacent in not refreshing its membership earlier” given how much restaurant-going habits have changed, and pointed to how Coca-Cola, Starbucks Coffee and PepsiCo have been better at refreshing their board composition in the last few years.
“We respect and take seriously the views of all of our shareholders. The Board of Directors recently added a highly qualified new Director, appointed a new Chair of the Governance Committee and has made several senior management changes. Our Board is experienced, independent and committed to maximizing shareholder value,” McDonald’s said in a statement.
““you deserve a break today...””
Barry Manilow wrote that.
L
The current CEO is black. An Affirmative Action hire to make McDonalds feel superior. It backfired on them big time, but they can’t admit that they screwed up by putting an unquafied black guy in the top spot...sort of like America!
Bring back the beef-tallow fries, the heat lamps, and Styrofoam containers, and get rid of the healthy crap, and McDonald’s will be back on top.
The place went to Hell when they pandered to the leftists and vegans.
All businesses have a lifecycle and theirs is on the downhill side. They need to re-invent a new business linked with the best of the past and the future. In other words, return to the Ray Kroc menu, use his good quality ingredients, and get some robotics to recreate those food items from the past. Get rid of the crappy food (provide good simple meals) and get rid of under paid immigrants speaking in foreign tongues among themselves and the customers (provide better communication). And get rid of those damn drive-inn speakers.
Robots can take orders and converse with multilingual customers in their language of choice while other machines recreate those Kroc menu items to perfection. Cost accountants may find a way to lower the price of menu items (robots and machines may be cheaper - no benefits or strikes/walkouts, just ingredient replenishment and maintenance) and be more competitive while increasing profits.
Just an idea. At least I hope the robots will not spit in my food or call me whitey in some foreign tongue. Maybe a double cheeseburger will taste like the old cheeseburger again. And even if the customer wants a McChittlin or something special like one of the current crappy items, they can be programmed to whip it up on special occasions.
All the ads they’ve run the last few years are primarily targeted to blacks.
Seriously. They don’t want me there and I don’t want to eat their food.
I like McD’s $1.00 hamburgers, with extra grilled onions. They’re juicy/tasty and remind of White Castles. When I go to White Castle’s, I request extra onions and a little au jus on those buns. Back in the day, their buns contained the juices of the steamed onions which made the whole burger delicious. Then for some reason, no more juicy buns. So I told the Manager that I wanted some juicy buns, extra grilled onions, salt & pepper. They were more than willing to accommodate me, and I also got a senior discount. This was one fine dining experience!:)
Make better burger
Bring back lard fries
Case solved
Good thing as Ray always said....it’s not the burgers ....it’s the dirt
I don’t know why anyone would do McDonalds for drive thru if there is an In and Out or Culvers in same vicinity
The unions want to take over McD’s
That is called inflation and every business seems to be impacted. Almost everything in the grocery store costs more for smaller sizes.
I say keep it simple and focus on quality, then price.
The problem with those ideas is that it would require massive investment in new equipment, remodeling of most if not all stores (14,000 US, 35,000 worldwide), and a complete disruption and reorganization of their supply chain. Plus there’s the complication of franchisee-owned stores vs corporate owned and who is going to pay.
maybe if McDonalds produced anything eatable they may turn things around but as long as they have processed crap, forgetabout it.
Actually, what I think is needed is for McDonalds to make real food. After a very long absence from eating there I got the hankering for a double cheeseburger and fries and drove to get one on a Sunday afternoon. The fries didn't even make it home for a drive of three miles. They were like eating sticks of Styrofoam with no taste. The double cheeseburger sure doesn't look like their picture, just two cheeseburgers torn apart so a double could be made from the two. Meat? They call it that. The only thing I think was real were the pickles.
I worked there at 14 in the early 60s. I can remember having to lug 100lb bags of Idaho potatoes up from the basement to cut, process and cook into fries in oil that was like Crisco - had to scoop it into the vats. I remember they had real meat, and real dairy shakes too.
What they have today is processed crap, I’m guess it’s mostly sawdust and soy.
Build it and they will come....
Build it and they will come....OR send their new driverless “Apple” cars to pick up their order and deliver it to them where ever they are.
That’s why the fast food business and Mickey D’s must change or die slowly like Radio Shack did. Remember RS was a leader in the first personal computers introduced back in the seventies and they failed to change with the then new technology.
Besides, look at the tax write-offs they will get for the crummy building architecture, fixtures, and equipment that are in place today. If nothing more, get rid of those damn speakers at the drive thru.
Time for change. Just look at new opportunities and get with the 21st century. It’s a different world out there.
Heck, there might be new job opportunities created for educated and knowledgeable people in this deal. But no H1-B people please, we have enough already.
Drive through represents 60% of their business.
Simplifying their menus would go a long way towards helping in that area.
“The current CEO is black. An Affirmative Action hire to make McDonalds feel superior. It backfired on them big time, but they can’t admit that they screwed up by putting an unquafied black guy in the top spot...sort of like America!”
The fired CEO was a long time McDonald’s executive. Whether or not he was an unprepared affirmative action promotion or just the wrong person for the job is impossible to tell. I’m sure many capable white or Asian managers would fail under the circumstances.
The marketplace in which McDonalds competes has been changing rapidly in ways which would challenge any CEO:
1) The rapid expansion of super gasoline stations (WaWa, Sheetz, Quick Trip) which serve quick prepared food and are taking market share from traditional fast food chains.
2) Michelle Obama and the national media’s attack on fast food as unhealthy.
3) The appearance of new, aggressive premium fast food competitors - Panara Bread, Five Guys who are capturing the fast food dollar.
4) More aggressive competition from traditional fast food competitors including Wendy’s, Burger King, and Chick fil a
5) Food price inflation, particularly beef prices, which has made the $1.00 menu, which propelled growth from 2000 to 2010 impossible to sustain.
6) McDonalds is not perceived as “cool” by young people.
7) Sluggish worldwide economic growth.
All of the above issues are long term and require long term strategic moves, not short term knee jerk reactions. Long term strategic moves do not typically realize immediate results. Whether or not the fired CEO was addressing, or not addressing, these issue is not known to the public.
Regardless, the CEO’s failure is also a Board of Directors failure. The average tenure on the Board is 13 years. Eight of 12 Board members have over 10 years service. Most of the Board members are Chicago business community cronies. McDonalds would be well serviced to replace some of the board with new members from across the country, perhaps including some people who actually visit the restaurants frequently.
Boards are often quick to hire and fire CEO’s. Rarely do boards fire themselves for poor performance even though they should.
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