Bites Out of the Bottom Line

    They are the big cheeses at the country’s biggest quick-service restaurant chains. So what kind of dough are the QSR 50’s top executives collecting?
    Finance | August 2008 | Lina Wright

    Between 2006 and 2007 the checks written to CEOs in every industry super-sized. The median compensation for leaders of S&P 500 companies rose 23.57 percent, according to a study by The Corporate Library, a corporate data research firm.

    But now, as the cost of everything from beef to buns continues to rise while consumers hold a tighter grip on their wallets, QSR took a look at what kind of salaries the top quick-serves’ leaders are taking home and what they are doing to earn their generous keep. Average total cash compensation received in 2007 by the CEOs on our list topped $8.6 million. With stock options factored in, each made upward of $10 million. Is such compensation warranted? Read on and decide for yourself.

    James A. Skinner

    • Age: 63
    • title: CEO/Vice Chairman/Director (CEO since 2004)
    • company: McDonald’s Corp.
    • hq: Oak Brook, Illinois
    • 2007 Total Cash Compensation: $9,443,486
    • 2007 Total Stock Options: $8,960,344


    When Jim Skinner was elected as McDonald’s CEO in 2004, the Golden Arches were slumping. The CEO of the world’s No. 1 restaurant company has since returned the brand to its roots, concentrating on selling the staples at price points consumers expect from the fast-food leader. The brand’s Value Meal items keep bringing customers back, despite the slowing economy.

    That new “old” strategy is paying off. McDonald’s ended 2007 with record-high sales of $22.8 billion—up 9 percent from the year before.

    And shareholders are “lovin’ it,” enjoying a 25 percent, three-year compounded annual return that’s more than double the three-year return of the S&P 500 and the Dow Jones Industrials.

    Skinner’s $9 million–plus salary for 2007 was 35 percent less than he was paid the year before. But that can be attributed to a hefty three-year performance bonus he received in 2006. Taking that out of consideration, Skinner’s pay increased 28 percent.

    John W. Chidsey

    • Age: 45
    • title: CEO/Director (CEO since 2006)
    • company: Burger King Holdings Inc.
    • hq: Miami
    • 2007 Cash Compensation: $4,147,081
    • 2007 Total Stock Options: $12,924,346


    Like Skinner, John Chidsey has masterminded a fast-food turnaround. Burger King, which was considered a floundering chain just a few years ago, announced its 2007 fiscal revenues were up 9 percent to a record $2.2 billion.

    The jump in the company’s stock price last year was the real Whopper at 68 percent.

    Chidsey is now focusing on the rest of the world. Burger King entered four new countries last year, opening 441 new stores globally. That’s a 26 percent increase from the year before. His menu strategy—introducing both upscale products like the new Steakhouse Burger as well as deals like the $1 Value Menu—appeal to the more cash-conscious consumer.

    Kerrii B. Anderson

    • Age: 50
    • title: Former CEO/President/Director (CEO since 2006)
    • company: Wendy’s International Inc.
    • hq: Dublin, Ohio
    • 2006 Total Cash Compensation: $4,174,313
    • 2006 Total Stock Options: $6,000,325


    Kerrii Anderson’s days at Wendy’s were numbered when, in April, the company agreed to a $2.3 billion merger with Arby’s parent company, Atlanta-based Triarc Co. Inc. Once the deal was approved, Triarc’s CEO Roland Smith (also on this list) took the reins. But Anderson didn’t walk away empty handed: Her payout was worth an estimated $15 million.

    The merger created the third-largest quick-service restaurant holding company in the U.S., with $12.5 billion in annual sales and more than 10,000 units. Both Wendy’s and Arby’s restaurants will continue to operate as separate business units, but there will be a consolidated support center in Atlanta.

    What does it all mean for shareholders? Wendy’s shareholders will receive 4.25 Triarc stocks for each share of Wendy’s stock they own.

    Fred DeLuca

    • Age: 60
    • Title: Co-Founder/President
    • Company: Doctor’s Associates Incorporated
    • HQ: Milford, Connecticut
    • 2007 Total Cash Compensation: Not Available*
    • 2007 Total Stock Options: Not Available*
      * Privately Held Company


    In 2007, Forbes magazine ranked DeLuca—Subway’s co-founder—No. 297 of the 400 richest Americans. Even though he has a net worth of $1.5 billion, DeLuca is rumored to have never purchased a new car and to only fly economy. It should be no surprise he also pays close attention to the company’s expenditures and is reportedly always looking for ways to decrease costs and increase profitability.

    In 2006, DeLuca came under fire when Doctor’s Associates Inc. was sued twice, each time by a group of franchisees over control of advertising dollars. Despite the ongoing legal disputes, Subway was ranked No. 2 by Entrepreneur magazine in its 2008 list of the world’s best franchises.


    David C. Novak

    • Age: 55
    • Title: CEO/Chairman of the Board/ President/Director (CEO since 2000)
    • Company: Yum! Brands Inc.
    • HQ: Louisville, Kentucky
    • 2007 Total Cash Compensation: $15,518,981
    • 2007 Total Stock Options: $126,550,356


    Novak’s biggest challenge when he took over Yum! (then operating under the name Tricon Global Restaurants) was to unite three global fast-food brands—KFC, Pizza Hut, and Taco Bell. All were floundering and suspicious of each other’s management styles.

    In the past decade, Novak has not only created a partnership among the three brands, he’s also rescued them financially. In 2007, Yum!’s total revenues topped $10.4 billion, an 8.9 percent increase from the previous year.

    One of Novak’s long-term focuses—international expansion—seems to be paying off. Yum! reported a 15 percent earnings per share growth for 2007, which it attributes to its success in China. Right now there are more KFC restaurants in mainland China than McDonald’s. The long-term plan? Open 20,000 units in the world’s most populated country.

    Howard Schultz

    • Age: 54
    • Title: Founder/CEO/Chairman of the Board/Director/President (CEO since 2008)
    • Company: Starbucks Corp.
    • HQ: Seattle
    • 2007 Total Cash Compensation: $10,628,214
    • 2007 Total Stock Options: $472,651,664


    Howard Schultz’s nose is officially back to the grindstone. After Starbucks’s stock dropped 42.8 percent in 2007, Schultz reclaimed the CEO job that he relinquished eight years ago.

    Can he rescue the sinking ship? Many say yes. The day after Wall Street learned Schultz was back, Starbucks stock rose 8 percent.

    The CEO’s grand plans include introducing a new energy drink, protein and fruit smoothies, and a “breakfast alternative” menu. He will also continue to slow new store openings in the U.S. and grow overseas investments. Still some critics say it might not be enough. And even Schultz admits that in this downturned economy, Starbucks could continue to suffer financially for another year or longer. The answer, he says, isn’t making the brand’s coffee drinks more affordable. Rather it’s reconnecting with customers, convincing them once again that Starbucks is an affordable luxury.

    Jon Luther

    • Age: 64
    • Title: CEO/Chairman (CEO since 2003)
    • Company: Dunkin’ Brands
    • HQ: Canton, Massachusetts
    • 2007 Total Cash Compensation: Not Available*
    • 2007 Total Stock Options: Not Available*
      * Privately Held Company


    Jon Luther is brewing a coffee war. Last year, he told Fast Company magazine, “Five years from now, if you’re looking for coffee, there will be only two places you’ll be thinking about: Starbucks and Dunkin’.”

    Luther is convinced there’s a market to be tapped—a younger demographic that foams at the mouth for Starbucks’ lattés, but just can’t afford them.

    The chain’s first offensive in the war was outfitting select locations with new speedy espresso machines able to make drinks in less than one minute. Its second move was unveiling a new and enticing breakfast menu that includes bagels and egg sandwiches.

    Today, 63 percent of Dunkin’ Donuts sales are coffee-related.

    As CEO of Dunkin’ Brands, Luther also heads Baskin-Robbins, and he’s reviving the ice cream chain through various media and entertainment partnerships.

    J. Clifford Hudson

    • Age: 53
    • Title: CEO/Chairman of the Board/Director (CEO since 1995)
    • Company: Sonic Corp.
    • HQ: Oklahoma City
    • 2007 Total Cash Compensation: $1,541,713
    • 2007 Total Stock Options: $16,088,771


    When Cliff Hudson took over as CEO of Sonic, menus differed from store to store, different vendors were used even in the same city, and the company’s accounting was still done manually.

    He first focused on consistency and now has his eyes set on growth. His plan is to quickly boost the chain’s presence by requiring new franchisees to operate at least two restaurants. The company currently has agreements to open more than 900 stores over the next seven years.

    Sonic is also focusing on advertising. It spent $30 million more on ads last year than ever before.

    Customers are buying it. In 2007, the company’s revenues increased 11.1 percent from the year before to $770.5 million. And investors are feasting on 16 percent five-year compound growth earnings.


    David A. Brandon

    • Age: 55
    • Title: CEO/Chairman of the Board/Director/Other Corporate Officer (CEO since 1999)
    • Company: Domino’s Pizza Inc.
    • HQ: Ann Arbor, Michigan
    • 2007 Total Cash Compensation: $14,782,414
    • 2007 Total Stock Options: $33,038,841


    David Brandon has been feeling the heat, and it’s not from his company’s ovens. In 2007, Domino’s made little dough—$37.9 million to be exact. That was down $68.3 million from the year before. Brandon attributed the plunge to “the combination of unprecedented cost inflation and cautious consumer spending” in the U.S.

    Rather than worrying about factors he can’t control, Brandon is focusing on his stores’ service levels, product consistency, and brand image. To the latter point, Domino’s has hired a new advertising agency (Crispin Porter + Bogusky of Burger King fame) to lead its efforts.

    Domino’s is also testing possible additions to the menu to help its stores better compete for lunch crowds. And Brandon is going after the little guy with little money. He’s implementing a new strategy to attract lower-ticket customers—a segment he says has been left behind in recent years by dramatic price increases.

    Roland C. Smith

    • Age: 52
    • Title: CEO/Director (CEO since 2006)
    • Company: Triarc Companies
    • HQ: Atlanta
    • 2007 Total Cash Compensation: Not Available*
    • 2007 Total Stock Options: Not Available*
      * Privately Held Company


    Roland Smith has quite a challenge on his hands—making Wendy’s and Arby’s one big, happy family. (He will head both companies once the merger is approved.) His first plan is a meeting over breakfast.

    Smith says both restaurants have growth opportunities in expanding their breakfast, snack, and late-night menu offerings. He’s also focusing on global expansion, both through acquisitions and new unit development.

    According to Smith, shareholders will soon be able to celebrate better financials. The merger should improve cost controls over food, labor, and other expenses between the two companies—generating $100 million a year in operating profits over time, according to Smith. To wit: Eliminating duplicate corporate functions and streamlining support services should save about $60 million.

    Source: Forbes/CEOs’ cash compensations; stock options are according to

    The Rank and File

    So how much bacon is everyone else bringing home? QSR also investigated the salary ranges of those working under the CEO in the quick-service industry.

    • Chief Operating Officer: $250,000–$468,000
    • Chief Financial Officer: $170,000­–$394,200
    • Chief Marketing Officer: $235,000–$315,000
    • Chief People Officer: $168,000–$295,000
    • Vice President of Distribution/Purchasing: $141,000–$185,000
    • Regional Director: $62,000–$200,000
    • General Manager: $26,900–$47,100
    • Assistant Manager: $17,300–$34,600

    Source: People Report “2007 Compensation and Benefits Survey”