In what is being considered a swift move for the fast food mega-giant, McDonald’s has fired their CEO Steve Easterbrook. Easterbrook was brought on as CEO in 2015. The reason for his untimely firing was due to a consensual relationship with an employee. Still, that’s a no-no in the company. It was ultimately the board who decided it was time to go.
The change was so sudden that investors didn’t know what to do. Easterbrook had done a good job in the position otherwise. He took over in 2015 when sales and stocks were slumping. But, in a few years with him at the helm, sales improved and stocks more than doubled. As of this latest announcement, stocks were down 3%.
Not all is lost for McDonald’s. Chris Kempczinski was elected the next CEO. He was seen as the heir apparent anyway. Kempczinski has been credited for helping to make a lot of the decisions that helped turn the company around. One of those was using fresh quarter pounder meat instead of frozen. Still, leadership changes often bring a lot of uncertainty. You never know the type of leadership they’ll provide.
“Chris Kempczinski is such an unknown factor,” Hottovy said. “Any time you have an abrupt leadership change and an unknown quantity …. it is going to make investors uneasy.” He’s going to have his own vision that may be different from Easterbrook’s.
McDonald’s Aggressive Growth Strategy
Yet, one of the biggest questions regarding this change is how Kempczinski will continue to pursue the Velocity Growth Plan. This plan is very aggressive and Kempczinski has been known to be tough on the franchisees. They haven’t been as progressive on all the advancements corporate is proposing. He wants them to update store designs and the technology in their restaurants.
“There’s been some friction with Chris,” said Hottovy. “He had a reputation for being hard on the franchisees, at times.” The company has a lot of working parts. In fact, the company is seen as a three-legged stool. The legs represent employees, suppliers, and franchisees. Without all the working parts together, the stool wobbles.
“Mr. Kempczinski’s legacy will hinge on his ability to generate traffic growth in the US, which neither of his two predecessors were able to achieve,” Saleh wrote in a note on Monday.
