Chris Kempczinski's new value menu for McDonald's
The 10-cent root beers are long gone, but Chris Kempczinski, who marked his seventh anniversary as CEO this week, is having to pay new attention to its value proposition.
Key points
- McDonald’s relies on its 5,000 independent partners to execute its strategy, Kempczinski notes, which means he must operate “through influence, not through direct control.” A clear focus on growth can unite his disparate stakeholders, he believes.
- “We have a saying here at McDonald’s: We reserve the right to get smarter.” This week, he told analysts he feels “overall, good” about franchisees’ willingness to roll out the upgrades his strategic plan requires.
- Changing a risk-averse culture through ‘positive shaming’ Kempczinski, who grew up in a Catholic household in Cincinnati and would visit McDonald’s after Friday night football games, admits to some Midwestern conservatism.
The Signal Interview An 11-item menu board from the 1950s still hangs in McDonald’s Chicago headquarters, recalling the era when Ray Kroc struck his franchise agreement with the McDonald brothers and began building the world’s best known fast-food chain.
Additional details
- But to reverse the drop in customer visits, he has had to put more marketing dollars behind potentially slimmer-margin deals, like a $2 breakfast sandwich with free fries for loyalty program members.
- Reserving the right to get smarter in a franchised system Kempczinski’s $8.5 billion game plan, announced in June and dubbed “McDonald’s > NEXT,” is the second strategic overhaul of his tenure.
- Kempczinski’s assurance that the company had started to turn things around in the last month of the quarter helped revive a stock that had fallen a jarring 32% between February and October.
- But the US economy’s current “K-shaped” nature means that wealthier households are still eating out in pricier restaurants, rather than trading down to eat burgers and fries.
- The business is facing a “challenging” US consumer environment, he told investors this week, with comparable sales falling 0.2% in the three months to September.
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