McDonald's replaces U.S. chief for the second time in two years

Fri Aug 22, 2014 3:26pm EDT

A passersby walks in front of a help wanted sign at a McDonalds restaurant in the Brooklyn borough of New York, March 7, 2014.  REUTERS/Keith Bedford

A passersby walks in front of a help wanted sign at a McDonalds restaurant in the Brooklyn borough of New York, March 7, 2014.

Credit: Reuters/Keith Bedford

(Reuters) - McDonald's Corp is replacing its U.S. president for the second time in two years, a move that suggests increased pressure on Chief Executive Don Thompson to improve sales in the fast food chain's home market.

The company on Friday named former McDonald's executive Mike Andres as president of McDonald's USA, replacing Jeff Stratton, who had been in the job since December 2012. McDonald's said Stratton, 58, is retiring.

Since last November, the world's biggest fast-food chain by revenue has suffered flat or declining monthly sales at its established U.S. stores. Among other things, analysts blame bloated menus for slower service, and said pressure has intensified from resurgent rivals such as Wendy's Co and Burger King Worldwide Inc.

"It's hard to argue that this type of turnover doesn't put more scrutiny on a CEO," Bernstein Research analyst Sara Senatore said of the U.S. management change.

"If results stay weak despite turnover in these executive roles, then ultimately it's the responsibility of the CEO."

Thompson, who became president and CEO in July 2012, has presided over a period of disappointing results from the U.S. region due in part to internal missteps, brutal competition and cautious spending by the lower-income consumers that frequent the chain.

In selecting Andres, who currently is the CEO of Nashville-based Logan's Roadhouse, McDonald's took the "rare" step of choosing an outside executive to lead the U.S. business, said Hedgeye Risk Management analyst Howard Penney. Stratton was McDonald's chief restaurant officer prior to being named president of the U.S. division.

"They're desperate," said Penney, who is among Wall Street's most bearish restaurant analysts.

Still, Penney said Thompson likely has until the end of 2015 to show improvement in the business because some issues are seen by investors to be beyond his control, such as the U.S. economy and Russia, which shut some of McDonald's branches in Moscow this week.

The Moscow closures were widely viewed as retaliation for Western sanctions against Russia

Franchisees, investors and analysts have urged McDonald's to simplify its menus to better compete with the likes of In-N-Out Burger and Chipotle Mexican Grill Inc.

Thompson has promised to get back to basics at McDonald's USA. At the same time, he is introducing new kitchen equipment that will allow diners to customize their hamburgers and sandwiches, a strategy that has fallen flat with critics.

Andres, 56, will take over on Oct. 15. He rejoins McDonald's after serving as chairman and CEO of Logan's Roadhouse, a chain with 261 full-service restaurants in 23 states. He also will oversee McDonald's Canada business.

Andres started his career at the Golden Arches as manager of his family-owned McDonald's in northern California. During his 30 years he was president and CEO of Boston Market, then a McDonald's subsidiary, and president of McDonald's central U.S. division, the company said.

Shares in McDonald's edged down 10 cents, or 0.1 percent, to $94.43 in afternoon trading on the New York Stock Exchange.

(Reporting by Lisa Baertlein in Los Angeles and Devika Krishna Kumar in Bangalore; Editing by Jeffrey Benkoe and Tiffany Wu)

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Comments (1)
Interconnect wrote:
McDonald major sales are in Asia particularly in China, which grew exponentially with affluence and life style. In Asia McDonald is symbolic fast food, being most imitated, copied, regardless of the trade mark and other legal consequences.
Food Security issue which rose in China could possibly be every where, possibly in the US. Mike Andres Executive President, McDonalds USA holds an iconic position, which the world watches. It is most important that iconic market of the US should immediately damp down the effect of food security, by enhancing/investing in food security, by incentives as extra fries, tennage offers, and evaluate the partners in China, and other Asian markets. Possibly McDonalds should operate the Chinese market, and other Asian market for two weeks with the US staff. This will change the negative effects.

Aug 22, 2014 12:11pm EDT  --  Report as abuse
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