McDonald’s Announces Major Shake-Up
McDonald’s Corp., faced with sagging U.S. sales and unhappy franchisees, on Wednesday announced one of the largest management shake-ups in its history with the retirement of its domestic operations president and a reorganization of its U.S. business.
Edward H. Rensi, who moved up the fast-food chain’s corporate hierarchy to become president and chief executive of McDonald’s USA, will retire because of family commitments, the company said. He will remain as a consultant through the corporate realignment.
Rensi will be succeeded by Jack Greenberg, who effectively took over day-to-day control of domestic operations late last year.
Michael Quinlan, chairman and chief executive, called the changes an “exciting, bold step forward” and “a major turning point for the U.S. system” of the world’s largest fast-food company.
But some analysts and the head of a disgruntled franchise owners group disagreed, saying the changes don’t address other serious problems, such as the quality of McDonald’s food.
The management change, “from an investment standpoint, is a nonevent,” unless McDonald’s deals with the food question, said Damon Brundage, a NatWest Securities analyst.
McDonald’s shares fell 69 cents to close at $48.06 on the New York Stock Exchange.
The company said the 52-year-old Rensi was retiring because of family commitments, but Brundage said his departure may be tied to the company’s problems. “I think Rensi is probably taking the fall a little bit for the slump in sales,” Brundage said.
The reorganization eliminates the company’s eight zone officers and divides McDonald’s U.S. business into five geographic divisions headed by their own presidents. The move will virtually create five companies, McDonald’s said, each with revenue of about $3.5 billion.
The company hopes the action will address franchisee complaints that McDonald’s Oak Brook, Ill., headquarters was making too many decisions, including ill-advised ones such as its recent 55-cent sandwich promotion.
“This is a day of celebration for the franchise family,” said Gary Dodd, chairman of the McDonald’s National Operators Advisory Board, which represents the 2,800 U.S. franchise operators.
But Dick Adams, head of the Consortium, a group representing McDonald’s restaurant owners dissatisfied with some of the company’s policies, called the change “evolutionary, not revolutionary.” He said four of the five new presidents were zone officers before the reorganization and that he doesn’t expect them to break any new ground.
The food question also lingers, critics say. In some independent taste tests, consumers have ranked McDonald’s behind Wendy’s International Inc. and Grand Metropolitan’s Burger King Corp., which analysts say have been gaining market share at McDonald’s expense.
