Don Johnson is out as CEO of McDonald’s after three years on the job (25 years with the company), effective March 1. He’ll be replaced by the company’s chief global brand officer Steve Easterbrook, becoming the third CEO in 10 years.
Johnson is 51 years old; his departure is being framed as a retirement. An early retirement apparently. Easterbrook is 48 and if he doesn’t turn around the fast food chain’s fortunes, he too could be on the path to an early retirement. He’s been with the company since 1993. According to The Wall Street Journal, McDonald’s didn’t give an official reason for Johnson stepping down.
From the WSJ:
Net income last year fell nearly 15%, to $4.76 billion, and McDonald’s stock has been basically flat since Mr. Thompson took over in July 2012—a period when the Dow Jones Industrial Average rose 36%.
McDonald’s shares gained more than 3% in after-hours trading on Wednesday following the news, to $91.60.
As we’ve documented here pretty thoroughly, McDonald’s is going through an identity crisis brought on by competitors that have a completely different look and feel as well as an appeal to millennials. More options for where to eat, sourced ingredients and simplified menus at “fast casual” restaurants like Chipotle and Shake Shack have McD’s looking out of touch. So now we have videos showing how McNuggets and fries are made, a clip with CMO Deborah Wahl reconfirming the company’s commitment to its customers, a downsized menu, and tagline tweaks.
By and large, these are marketing and publicity changes…so the chief global brand officer makes sense as a chosen successor. The company appears to have identified better messaging as the solution to its problems.
But here’s why we waiver in the headline; he “might” make a good choice. The problem with McDonald’s goes beyond marketing. In that same WSJ article, the author notes that there are so many McDonald’s restaurants (“4.6 for every county in the country”) that the company is unwieldy. Add to that some of the issues that are, as Fortune notes, out of their control, like higher commodity costs.
And then there’s the issue of what McDonald’s really is. From Fortune:
“McDonald’s is the quintessential quick-serve restaurant. It has risen to the top of the fast-food chain by being comfortably, familiarly, iconically ‘mass market’ and so ubiquitous as to be the Platonic ideal of ‘convenient.'”
Do you dump that entirely? Frame it in a different way? Improve quality, an issue that many customers have highlighted, raise prices and rebuild?
These are big problems that will require input from a few different areas of the company. In that sense, Easterbrook as an individual had better be good at building a cohesive brain trust within the company. But as a marketer, he will have to take all of the changes that McDonald’s will undoubtedly be making and find a way to present them to the outside world in a way that they understand. Heretofore, the hodgepodge of things that the company’s working on hasn’t come together into anything more than a frenzy of activity from a company that can’t find its footing.
As a sidenote, we’d also like to point out that Johnson ouster is a blow to diversity in corporate America: he was one of only a few Black CEOs at Fortune 500 companies. Here’s a separate article about that.