McDonald's faces major shake-up

By Charles Pretzlik in New York

The Daily Telegraph (UK); Tuesday, May 20, 1997

McDONALD'S is planning sweeping management changes to lure more fastfoodies through its golden arches after the success of its deep discount offer of 55 cent Big Macs has been called into question by franchisees and analysts.

The expected changes were described by one franchisee as the most significant management shake-up since milk-shake machine salesman Ray Kroc bought the McDonald brothers' name and small Californian diner in 1961 and developed it into the world's largest restaurant chain.

Franchisees said yesterday the company plans to decentralize the group's operations, instilling greater autonomy at the local level by replacing its eight zone managers with a smaller number of national division presidents who will be less reliant on directives from group headquarters in Oak Brook, Illinois. No job cuts are expected.

In an internal memorandum, McDonald's vice-chairman, Jack Greenberg, who is in charge of the U7S business said: 'We need to make fundamental changes in our business structure.'' He added that the company ' needs to operate with more speed! agility and decisiveness" and must "cultivate a risk-taking mentality that is driven by our field-operating needs '.

A spokeswoman declined to comment directly but said: "We have no announcement, pending soon."

Franchisees who have conducted preliminary soundings claim that. since the price of a Big Mac was cut by 75pc to 55 cents last month sales have slipped by up to 6pc from a year earlier.

They claim American consumers have been confused bv the rule that French fries and a soft drink must be purchased for them to qualify for the cheaper burger. However, a spokesman for the company said: "We are seeing a lift for total sandwich sales."

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