McDonald’s CEO Plans to Slash Capital Spending

Pledging to make McDonald’s Corp. “better, not just bigger,” the burger chain’s chief executive disclosed plans Monday to sharply reduce capital spending and open fewer restaurants this year amid an unprecedented slump.

Jim Cantalupo, under pressure to revive McDonald’s sagging sales and stock price, also unveiled a marketing campaign and said the company would improve its menu. Overall, he said, the company would “do fewer things and do them better.”

Cantalupo told analysts in New York that his turnaround plan relies on improving sales at existing restaurants rather than more rapid expansion for the world’s largest restaurant chain.

Cantalupo said the company expects to spend $1.2 billion on capital expenditures this year -- $700 million less than previously announced and $800 million below last year’s total.

The unspent money, he said, would be used to strengthen the balance sheet and return cash to shareholders through higher dividends and share repurchases.

McDonald’s shares surged after the announcement to their highest level since Jan. 20, climbing $1.25, or 8.6%, to $15.80 on the New York Stock Exchange.

The company, based in Oak Brook, Ill., expects to open about 960 McDonald’s restaurants worldwide this year. But the net increase in outlets, after subtracting stores to be closed, is expected to total just 360 -- down from more than 1,000 in 2002.