Industry News | April 23, 2012
'Business as Usual' for McDonald's Through CEO Swap
After announcing that the company’s comparable sales increased 8.9 percent in the first quarter of 2012, outgoing McDonald’s CEO James Skinner said the company’s transition to new CEO Donald Thompson would be smooth and wouldn’t hurt momentum.
Skinner reassured investors during the company’s first-quarter earnings call on April 20 that there are no planned changes in the company’s strategies or management philosophy. The quick-serve giant will continue its long-term strategy of systematically grabbing market share through low-priced menu offerings, Skinner said during the call.
When asked by an analyst if McDonald’s intention was to “migrate people off the dollar menu,” Skinner said the dollar menu would continue, as the “plan is to win, and we expect to be able to maintain our competitive differentiation.”
He said that although other U.S. quick serves “have spurts of enthusiasm and excitement for their brand when there’s a change in ownership … we think it’s business as usual for McDonald’s in terms of what we’re focused on, and our strategies that have served us very, very well.”
Thompson said on the call that McDonald’s has stepped up its emphasis on branded affordability. “We also know this will highlight and emphasize products like the Snack Wraps, which are accretive to building the margin,” he said.
Thompson said the company’s new extra value menu fits in with the company’s overall price-value strategy. McDonald’s is willing to take a hit on commodities in the near term in order to gain market share over the long haul, he said, even though some aspects of the dollar menu are “tougher relative to cash flow and margin accretion.”
“What we’ve done—particularly in France and Germany—we have had more aggressive conversations around how we position our value menu and our value offerings,” Thompson said. “In Germany, they’ve done some value things with their basic value menu … the franchisees are considering other things they might want to do to continue the momentum that we’ve had relative to market-share gain.”
Skinner said employment numbers in the U.S. are worsening. “Confidence has gone up some, but I think that’s because consumers are just worn out,” he said, adding that consumers “are in a place of normalcy now, relative to this entire issue of the economy.”
McDonald’s European sales were up 5 percent in the first quarter. Skinner said global comparable sales for April were expected to be 4 percent.
By Jan Fletcher
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