By David Kesmodel And Ilan Brat
In tapping Steve Easterbrook as its new chief executive,
McDonald's Corp.'s board has opted for a company insider with an
unusual attribute: an outsider's perspective.
British-born Mr. Easterbrook, who will become CEO of the U.S.
corporate giant on March 1, spent most of his career
overseas--including two years outside of McDonald's, in successive
CEO jobs for a pair of smaller restaurant companies in the U.K.
Investors are hoping his breadth of experience will help solve a
riddle that bedeviled current Chief Executive Don Thompson: how to
revive a fast-food behemoth beset with fierce competition from a
host of upstarts and shifting tastes of American consumers.
People who have worked with Mr. Easterbrook say the
48-year-old--the second non-American CEO of McDonald's after
Australian-born Charlie Bell's brief stint in 2004--brings a high
tolerance for risk and new ideas that could make him well-suited
for the challenge. Many credit him with reviving McDonald's British
business when he ran it in the last decade--and Mr. Easterbrook
himself has trumpeted his affinity for change.
"My motivation at the moment is around knowing how it feels to
turn a business around," he said in recorded remarks to an industry
consultant last month, ahead of his promotion on Wednesday. "I
can't wait to have that feeling again."
Mr. Easterbook faces skepticism that a company veteran who has
served in Mr. Thompson's management team will be able to make the
radical changes that some observers think are necessary.
Larry Light, a consultant and former chief marketing officer for
McDonald's, said Mr. Easterbrook will need to move more quickly
than Mr. Thompson in addressing the company's bloated menu, slowing
customer service and other shortcomings. "I don't blame Don for the
problems [at McDonald's], but he didn't act fast enough, dramatic
enough and decisively enough," Mr. Light said.
In his December remarks, Mr. Easterbrook indicated he thought
the company needed to act more urgently. "We are a risk-averse
company, very methodic and thoughtful and thorough in what we do,
but time doesn't allow you to do that when you're in a turnaround,"
he added. "You can't incrementalize your way out of it."
McDonald's declined to make Mr. Easterbrook available for an
interview on Thursday.
Currently chief global brand officer, Mr. Easterbrook won praise
within the company for successful advertising campaigns and efforts
to engage in Europe with the burger chain's critics. And his stints
running the two British restaurants chains from 2011 to
2013--PizzaExpress Ltd., a chain that today has 500 casual-dining
restaurants, and Wagamama Ltd., which operates more than 100
Japanese-style noodle bars--may help provide the fresh eyes needed
to tackle McDonald's many challenges, analysts said.
"He is almost as much of an outsider as you can expect to come
from McDonald's," which long has promoted managers from within,
said Sara Senatore, an analyst with Sanford C. Bernstein.
Mr. Easterbrook grew up on the outskirts of London and studied
natural sciences at Durham University in the north of
England--where he played cricket alongside future England national
team captain Nasser Hussain. He flirted with a career in accounting
before starting as a financial reporting manager at McDonald's in
1993, where he quickly ascended the ranks.
In the 2000s, McDonald's faced a sales funk in the U.K., driven
in part by concerns about the quality of its food and its treatment
of employees. Mr. Easterbrook, promoted to head that business in
2006, boosted sales by modernizing restaurants with a cleaner look,
revamping the menu and working to portray McDonald's as
environmentally friendly.
He also was a fierce defender of the brand, challenging
campaigners who called McDonald's food unhealthy and publicly
decrying the term "McJobs, " used to deride staff conditions. He
told a British newspaper in 2006 that he ate a McDonald's meal
every day, and that a Quarter Pounder with Cheese was his favorite.
He went on British television that year to debate Eric Schlosser,
an industry critic and author of "Fast Food Nation."
"Everyone likes a burger every now and then," he said in the
debate. "If you don't want fries with your Happy Meal, you can
switch it for a fruit bag."
He wasn't afraid to take on critics, and "it helped turn that
particular market around," said a former senior McDonald's
executive.
At the same time, Mr. Easterbrook showed an interest in adding
healthier-menu options and an appreciation for the importance of
marketing to moms as well as its core male consumers, said Cheryl
Berman, former chief creative officer at advertising agency Leo
Burnett USA, who oversaw its McDonald's account.
Mr. Easterbrook, who spearheaded McDonald's participation in
Apple Inc.'s Apple Pay initiative, also has emphasized trying to
recapture customers in their 20s and 30s who are defecting from
McDonald's. In the December presentation, to Chicago-based digital
consultancy ÄKTA, he said he wanted McDonald's to expand the ways
customers can buy its products, and discussed the need for greater
customization and possibly even a delivery service. "People's
desires are changing. They want to be treated as individuals, not
as numbers," he said.
His career choices also suggest willingness to shake things up.
Mr. Easterbrook became president of McDonald's Europe operations in
2010, but he left the company less than a year later for the first
of the British CEO stints.
He then returned to the Golden Arches in June 2013 to head its
global brand operations.
Mr. Easterbrook's new role is by far the most daunting.
McDonald's is in the throes of its worst slump in more than a
decade. The retirement of Mr. Thompson, 51, followed two years of
worsening sales declines in its core U.S. market. Net income last
year fell nearly 15% to $4.76 billion.
McDonald's shares--basically flat over Mr. Thompson's tenure
through Wednesday--rose 5.1% on Thursday to $93.27 in composite
trading on the New York Stock Exchange.
Mr. Light, the former McDonald's marketing executive, said the
company needs to focus on its direct competitors, including Burger
King and fast-growing burger chains like Five Guys and Shake Shack,
and not worry so much about restaurant chains like Chipotle Mexican
Grill Inc. and Panera Bread Co. that appeal to health-focused
consumers. "In a turnaround, you have to focus on your direct
competitive sets," he said. "You don't have the luxury of focusing
on the indirect set."
Simon Zekaria and Alex MacDonald contributed to this
article.
Write to David Kesmodel at david.kesmodel@wsj.com and Ilan Brat
at ilan.brat@wsj.com
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