McDonald’s CEO Will Step Down

McDonald’s Corp. Chief Executive Jack Greenberg said Thursday that he would retire at year’s end.

The restaurant chain named Jim Cantalupo, former vice chairman and president of the firm, to succeed Greenberg, 60.

The company eight months ago said Greenberg, once a Wall Street favorite whose star faded, had agreed to stay at his post for three more years.

Analysts said they were not surprised by Greenberg’s retirement, citing McDonald’s disappointing profit and the 55% drop in its stock price since Greenberg became chairman in 1999.

The announcement came as Greenberg, a former accountant who rose through McDonald’s financial ranks, struggled to revive sales in the United States, the world’s largest fast-food market.

McDonald’s expanded the number of its signature Golden Arches restaurants by more than 30% during Greenberg’s five years at the helm.

But after years of heady growth, McDonald’s faced growing competition in a saturated market. Its food and service suffered, critics said, and they questioned whether it had grown too rapidly.

A hamburger price war broke out with archrival Burger King Corp., and the discounting threatened to further erode profit.

One of Greenberg’s biggest problems was disappointment that a new cooking system aimed at improving quality and service did not live up to expectations.

Overseas, sales have been hurt by outbreaks of “mad-cow” disease in Europe and Japan, which weakened demand for beef, as well as currency crises in Latin America.

McDonald’s posted earnings declines in seven out of the last eight quarters. The company last month announced layoffs and signaled that it would begin to slow the pace of expansion, exiting several overseas markets. In October, it announced plans to drastically cut back on restaurant openings in the United States and said it would spend more money to refurbish its existing locations. But some investors said the changes were too little too late.

“They should drastically slow the pace of new store openings in the United States, preferably to zero,” said David Kolpak, an analyst with Victory Capital Management.

“I think the discontent [with Greenberg] has been with the pace of that change, and investors should be able to read some hope into this management change in that a new team may have more of a mandate to move faster.”

Shares of Oak Brook, Ill.-based McDonald’s rose 41 cents to $18.78 on the New York Stock Exchange after the news.