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McD's makes a change at the top

Written by George Anderson

McDonald's has been on a search for answers. The company has posted months of declining same-store sales in the U.S. and abroad. In a familiar response to such challenges, the burger giant announced yesterday that Don Thompson would step down as president and CEO of the organization, effective March 1. Steve Easterbrook, senior vice president and chief brand officer of McDonald's, will replace Mr. Thompson who held the top spot for two years.

"It's tough to say goodbye to the McFamily, but there is a time and season for everything," said Mr. Thompson in a statement. "I am truly confident as I pass the reins over to Steve, that he will continue to move our business and brand forward."

Investors seemed to welcome the management change as McDonald's stock climbed more than three percent in after-hours trading.

"With sales stagnant for this long, there's been a lot of push for change," Will Slabaugh, an analyst at Stephens Inc. told Bloomberg News. "They had to show investors they're serious about changing and improving sales."

Mr. Easterbrook, who ran divisions in Europe between 2006 and 2011, will face a big challenge turning around a business that is losing a younger generation of consumers to chains such as Chipotle.

"The students in my classes don't even think of going to McDonald's," Christopher Muller, professor of hospitality at Boston University, told USA Today. "They've been taught not to go there since they were kids."

As an Associated Press report points out, McDonald's has been on a mission to try and change its image with consumers, particularly younger ones. Last month, Mike Andres, president of McDonald's USA, said the chain was exploring how to reduce the number of ingredients in its products as well as preservatives.

McDonald's has also lost some of its perceived advantage on price. A recent piece by Brian Sozzi, president of Belus Capital Advisors, on TheStreet pointed out that a cheeseburger at Five Guys, which is considered to be much higher quality, sells for $6.79 while a McDonald's Big Mac sells for $5.

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