McDonald's to go back to its roots to beef up fIat US sales

Mark Tran in New York

The Guardian (UK); Tuesday May 20th 997

McDONALD'S is embarking on the most sweeping management changes since the legendary Ray Kroc joined the fast food company in the early 1950s and turned it into the world's second most familiar brand name after Coca-Cola.

In an internal memo, Jack Greenberg, McDonald's vice-chairman and head of the company's US operations. told senior corporate executives, regional managers and some franchisees of the need to act more decisively to beef up profitability and market share. The company. He wrote, "needs to operate with more speed, agility and decisiveness. We also need to cultivate a risk-taking mentality that is driven by our field operating needs."

The move comes at a time when McDonald's has come under pressure as analysts and franchisees have questioned the profitability of Campaign 55, a 200 million (122 million) US price-cutting promotion that offers a 55 cent Big Mac when bought with a soft drink and fries.

Mr Greenberg took pains to reassure the company's 5,000 US employees that no dismissals are on the cards. McDonald's operates more than 21,000 restaurants worldwide and has more than a fifth of the US fastfood restaurant market. It is expanding further afield, opening outlets this year in Tahiti, and Minsk, the capital of Belarus. It also opened its first non-beef restaurant this year, in India where Big Macs are made from lamb. But sales in the US are flat or down this year.

The new management structure, to come into effect during the next few months, is described by Mr Greenberg as a "return to the kind of restaurant based, grass-roots management that helped our system grow in the first place". Some franchisees believe that a change is needed as it has become harder to work through the layers of management at company headquarters.


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