28th October 1996
When the PR industry gathered last week for its annual bash, many of the spin doctors suspected that the judges' drinks had been spiked, such was the succession of surprise decisions. PR Week magazine's "Campaign of the year" garland was awarded to the late Ken Saro-Wiwa and the Ogoni people of Nigeria, for a struggle orchestrated by Body Shop. Despite the campaign's obvious fatal outcome, a jury led by the Department of Health's feisty head of press pointed to the massive international repercussions.
Still more outlandish was the nomination in the health category of National Constipation Day, an announcement which provoked an unseemly explosion of laughter from the now tired and emotional PRs. By the time that Mike Love of McDonald's picked up the "PR professional of the year" prize (for handling Ronald's response to the beef crisis), the lack of any mention of the burger chain's endless, image-hurting court case against two critics led the spinners to feel they were on Fantasy Island.
David B. Green, Senior Vice President, Marketing, will fill a newly created position as the senior marketing officer of McDonald's International, now reporting directly to James L. Cantalupo, President and Chief Executive Officer, McDonald's International. "It's vital to have an executive with David's 24 years of McDonald's experience guide our International Marketing's direction and development, as we continue to expand rapidly around the globe," said Quinlan.
This is the same David Green, who stated on oath that coca cola is nutritious as it is 'providing water, and that is part of a balanced diet', and agreed that McDonald's could 'change people's eating habits' and that children are 'virgin ground as far as marketing is concerned'.
He is now in charge of the $2 billion dollar strategy of 'McDonald's International.
McDonald's Corp. Friday reported a 10 percent rise in net income, despite a weak U.S. operating environment that was offset by growth overseas.
The fast-food giant, which has nearly 20,000 restaurants worldwide, said net income rose to $440 million from $400 million. Earnings per share gained 11 percent, with fewer shares outstanding, to 62 cents a share from 56 cents.
Earnings for the quarter, however, were about 1 cent below what analysts had expected.
McDonald's, based in Oak Brook, Ill., said operating earnings in the United States fell five percent in the third quarter while company revenues rose only one percent.
"Our U.S. restaurants are operating in a complex, dynamic and difficult marketplace and recent operating performance has fallen short of our goals," Chairman Michael Quinlan said in a statement.
McDonald's said U.S. same store sales -- measuring results for units open at least one year -- were negative for both the third quarter and nine-month period.
But U.S. sales may be picking up, said Merrill Lynch analyst Peter Oakes. "I think (U.S. same store sales) are starting to hit bottom," Oakes said. "Thus far in October, it (seems) like they have picked up and are in the flattish range."
McDonald's recently reorganized its management to address disappointing results in the United States.
Outside the United States, McDonald's operating earnings grew 11 percent in the quarter as revenue jumped 13 percent.
It said growth in earnings was strongest in Hong Kong, England, Italy, Spain, Sweden and Taiwan. Results in Mexico remained weak due to the sluggish economy, it said.
While McDonald's continues to expand its global reach, the company said its new restaurant openings for 1996 and 1997 likely will be at the low-end of its targeted range of 2,500 to 3,200 units.
"We will hit the low end of our projected range (with) 2,500-plus restaurants (in 1996)," McDonald's spokesman Chuck Ebeling said. "We're just doing our planning for next year, but we expect to do 2,500 plus next year."
This would be the first time in at least three years that McDonald's failed to meet its expansion projections, as it cuts back on limited menu, or satellite, units.
In 1995, McDonald's opened 2,430 units, beating the projection for that year of 2,300. In 1994, it opened 1,800 units, beating the projection of about 1,400 to 1,700.
McDonald's has nearly 20,000 restaurants worldwide.
"We've been ratcheting up the level of development every year since around 1991," Ebeling said.
Ebeling said McDonald's this year plans to open about ''600-plus'' satellite units worldwide, down from its original plan of 700 to 1,000 satellites. The biggest decline will be seen in the United States.
"We recognize we need higher volume restaurants to meet the kind of profitability that we'd like for ourselves and our franchisees," Ebeling said.
Merrill Lynch analyst Peter Oakes said the profitability of some satellite units, which are often built in non-traditional sites such as shopping malls, has been uncertain. ``In the big picture, the financial performance of satellites appears to be spotty,'' Oakes said.
Ebeling said U.S. satellite units will acount for about one-third of the total for these smaller sites, compared with 60 percent as originally planned.
Overall, Ebeling said about one-third of McDonald's total restaurant openings will still be in the United States.
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NatWest said it cut earnings per share estimates for McDonald's Corp on Thursday and kept the stock at hold after a review of the third quarter.
McDonald's Corp reported a poor quarter as international sales were soft.
It cited continued pressure on U.S. same-store sales and margins for the next three to six months, slow international operating income growth and too-high earnings per share estimates.
"We do not expect things to improve materially over the near term" in the United States, NatWest said in a research report. It said Q3 earnings quality were poor and said a lower tax rate and favorable swings both the non-operating expense and other operating income lines contributed to the $0.62 a share quarter.
McDonald's shares fell 1-7/8 to 44-1/8.
EVEREN Securities analyst Dean Haskell said Monday he had cut his fourth quarter earnings estimate for McDonald's Corp to $0.57 a share from $0.60. In the 1995 fourth quarter the company earned $0.51 a share.
Haskell cut his full-year 1996 estimate to $2.20 a share from $2.25, and cut his 1997 estimate to $2.45 from $2.55.
The intermediate price target on the stock was cut to $46 from $48, and the long-term price target was cut to $48 from $50.
In a report, Haskell said McDonald's third quarter earnings of $0.62 a share, up from $0.56 a year ago, was $0.02 below his estimate.
McDonald's shares were off 1-3/8 at 44-3/4.
OAK BROOK, Illinois -- McDonald's Corporation (NYSE: MCD) Chairman and CEO, Michael R. Quinlan, today announced major re-alignments and promotions in McDonald's management structure to bring further focus as the Company addresses the growth potential of its U.S. and International operations.
"As we work to maximize McDonald's global growth potential, I've decided to tap the depth of our highly experienced management to make several key re-alignments, adding even more strength to our U.S. management, while also bringing targeted additional expertise to our corporate and international staffs," Mike Quinlan explained.
"While these changes are evolutionary, they will bring more management firepower where we need it, both for the short and long terms. These changes will bring all the benefits of our global experience to bear on each of the markets in which we operate, to further strengthen our growth opportunities. In a complex, dynamic and difficult U.S. marketplace, we are focusing on delivering great food taste, enhancing the quality of service, strengthening strategic marketing and adding new restaurants. In the International arena, which is already producing more than half of our operating income, we are just beginning to tap enormous markets across nearly 100 countries, as Brand McDonald's goes more global every day," Quinlan added.
Jack M. Greenberg, currently McDonald's Vice Chairman and Chief Financial Officer, takes on the newly created position of Chairman, McDonald's U.S.A., while relinquishing the CFO position. Edward H. Rensi, McDonald's U.S.A. President and Chief Executive Officer, now reports directly to him. Greenberg's new title will be McDonald's Corporation Vice Chairman and Chairman, McDonald's U.S.A. "Jack has provided outstanding leadership since joining McDonald's as Executive Vice President and CFO in 1982. He'll help us maximize the growth of the U.S. business by adding the broad scope of his skills to our U.S. management team. He will devote a significant amount of his time to working with Ed, his team, and U.S. franchisees, providing domestic strategic direction, and bringing additional leadership to all elements of our U.S. business," Quinlan commented. Greenberg continues to report directly to Quinlan, and continues in his corporate responsibilities, while Michael L. Conley takes over Greenberg's duties as Chief Financial Officer.
Conley, currently McDonald's Senior Vice President and Controller, is promoted to Executive Vice President and Chief Financial Officer. "Mike is more than ready to take on the CFO position," Quinlan added. "He has served McDonald's for 22 years with increasing responsibilities in the accounting and tax areas, and has been involved in a number of management initiatives." Conley will report directly to Quinlan, and be responsible for Accounting, Information Systems, Investor Relations, Tax, Treasury. Christopher Pieszko, Vice President and U.S. Controller, is promoted to Vice President and Corporate Controller, reporting to Conley.
Paul D. Schrage, Senior Executive Vice President, Chief Marketing Officer and a member of the Board of Directors, has announced his intention to retire within a year. "Paul has headed Marketing since joining McDonald's 29 years ago, and guided the Golden Arches to our position as one of the best-known and most-admired global consumer brands," observed Quinlan. "Over the near term, Paul, who has made countless contributions to the growth of 'Brand McDonald's' and the success of the McDonald's System, will guide and assist in the transition and re-alignment of the top Marketing priorities, as we strive to lengthen our lead as the top global foodservice brand." Schrage will continue as Chairman of Ronald McDonald House Charities.
To even more directly align McDonald's marketing initiatives with the priorities of our U.S. and International operations, major changes are being made in the responsibilities of the Company's two senior Marketing executives. David B. Green, Senior Vice President, Marketing, will fill a newly created position as the senior marketing officer of McDonald's International, now reporting directly to James L. Cantalupo, President and Chief Executive Officer, McDonald's International. "It's vital to have an executive with David's 24 years of McDonald's experience guide our International Marketing's direction and development, as we continue to expand rapidly around the globe," said Quinlan. Brad A. Ball, Senior Vice President, U.S.A. Marketing, takes over full responsibility for U.S. Marketing, and will report directly to Ed Rensi. "Brad joined McDonald's last year after working on our local business in many leadership roles over more than 20 years at DBC Advertising in Los Angeles, and brings his knowledge of national and field marketing to our U.S. Marketing team," said Quinlan.
McDonald's is the largest and best-known global foodservice retailer, with more than 19,200 restaurants in 94 countries. Yet on any day, even as the market leader, McDonald's serves less than one percent of the world's population. The Company plans to expand its leadership position by adding restaurants and by increasing sales and profits through excellent operations, superior marketing, and cost efficiencies.
A holyman sips a soft drink at the opening of the first McDonald's restaurant in India at New Delhi yesterday.
It's the first McDonald's in the world with no beef because 80 per cent of the population is Hindu, a religion whose devotees eschew beef and hold cows sacred.
Mutton is served instead and prices at 50 cents (33p) for a burger are comparable with most Indian outlets. Other foreign restaurants, including Pizza Hut and Kentucky Fried Chicken, have been targeted by demonstrators and vandals, who insist on self-sufficiency.
There were no protests at McDonald's as the mutton for the Maharaja Macs came from Indian sheep, potatoes for French fries from Indian farms and Coke from an Indian bottler.
PARIS (AP) Many French think U.S. television programmes, movies and fast food are having a negative impact on French culture, and their resentment is rising, a new poll shows.
Sixty-eight percent of respondents said American TV programs were having an adverse effect on the country, according to the Louis Harris poll released Wednesday by the newsmagazine Le Point.
In a similar Harris survey in 1984, only 45 percent thought so.
Fifty-seven percent had the same opinion of Hollywood movies, up sharply from 36 percent in 1984.
Outside of TV and movies, a solid majority of respondents believe that American influence in most categories posed no threat to the French way of life.
Yet, in each category there are pockets of dissidents.
While only 9 percent resented American cuisine 12 years ago, 35 percent do today, despite the success here of McDonald's and Tex-Mex restaurants.
The growing influence of the English language on French culture -- an explosive issue here for decades -- still angers many French, the poll found. Thirty-five percent of respondents said they were displeased, up from 28 percent in 1984.
Countering the growing resentment, fewer French apparently scorn American music. Thirty-six percent said they thought it had too great an influence, down from 42 percent in the 1984 survey.
Asked whether they would be better or worse off if they lived in the United States, 52 percent said they'd be less happy. Only 12 percent said they'd be more content.
Telephone interviews were conducted with 1,001 people aged 18 and older on Oct. 25-26. No margin of error was given, but it is typically 3 percentage points in polls of this type.
New York (AP) - Television's growing news-all-day chorus is getting two more voices and both are talking sports.
ESPN and CNN, two of the most famous names in cable programming, each are launching 24-hour sports news networks over the next six weeks.
ESPNews recently identified five charter advertisers -- Coors Brewing Co., General Motors Corp., Levi Strauss & Co., McDonald's Corp. and Procter & Gamble Co. Several already advertise heavily on ESPN and ESPN2, but officials declined to describe how much they had committed to the sports news channel.
"We like to get in on the ground floor and take advantage of growth opportunities," said Dean Rotondo, a spokesman for GM. Levi's Dockers brand is discussing being a title sponsor of a "Story of the Day" feature, said brand marketing director Heidi Oestrike.