McDonald′s unveils revamp strategy | Business| Economy and finance news from a German perspective | DW | 04.05.2015
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McDonald's unveils revamp strategy

The US fast-food giant has unveiled new drastic steps to whip the home of the Big Mac back into shape, as customers are falling out of love with the company. The move includes leaner structures and healthier foods.

Steve Easterbrook on Monday announced the initial steps of a major makeover, meant to rekindle consumers' love-affair with the embattled hamburger giant.

Beginning July 1 this year, the Golden Arches company will operate under a new organizational structure, dividing its business into four new segments: the flagship US market, "international lead markets" such as Germany and the UK, "high-growth markets" such as China and Russia, and foundational markets with "the potential to operate under a largely franchised model," McDonald's said in a statement.

The move aims to group markets with "similar needs, challenges, and opportunities for growth," the Oak Brook, Illinois-based company wrote.

Easterbrook boasted that McDonald's, with its more than 36,000 restaurants around the world, had "scale and reach like no other company," but admitted that its vast bureaucracy was holding it back. "We're not on our game," said the CEO and President, who took over the reins of the world's biggest burger chain in March.

Leavin' it, not lovin' it

But cumbersome business structures don't fully explain the company's poor performance in recent years. Changing tastes, food quality scandals and intensifying competition have taken a big bite out of the fast-food chain's profits, culminating in a stinging 33-percent drop last quarter.

In an effort to reverse the fortunes of the house of the Big Mac, Easterbrook announced a series of major changes in just the last weeks, including all-day breakfast at some US restaurants, curbing the use of antibiotics, and wage hikes.

Here in Germany, the company last month introduced its first table-service restaurant as it tries to shed its image as a greasy junk-food joint.

The firm now also said it would double the number of restaurants it was planning to close this year to 700 restaurants globally, in an effort to cut $300 million (268.8 million euros) in costs by the end of 2017. In addition, it would accelerate sell-offs of 3,500 divisions to franchisees by the end of 2018, meaning that nine in ten restaurants would be franchised.

"As we look to shape McDonald's future as a modern, progressive burger company, our priorities are threefold - driving operational growth, returning excitement to our brand and unlocking financial value," Easterbrook added.

Monday's strategy announcement came less than three weeks ahead of the company's annual shareholder meeting, with the CEO pledging to return up to $9 billion to shareholders this year.

pad/uhe (AP, AFP)

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