McDonald's Taps Financial Executives for Top Posts Amid Cost-Cutting Efforts

Strategic Insights -

In a major shake-up, McDonald's Corporation has named Jack M. Greenberg, a financial executive with 16 years of service at the company, as its new chief executive. Greenberg, previously head of the company's U.S. operations, has been tasked with improving the quality of food, ambiance, and customer service. His predecessor, Michael R. Quinlan, will remain as chairman. The move is seen as a clear signal to cut costs and reorganize the company's infrastructure, with the new executive team facing high expectations from Wall Street and franchisees.

Key Takeaways:

  • Jack M. Greenberg, a financial executive with 16 years of service at McDonald's, has been named chief executive, replacing Michael R. Quinlan.
  • Greenberg's top priority is to improve the quality of food, ambiance, and customer service, following a period of rapid global expansion under Quinlan's leadership.
  • Greenberg will be joined in the turnaround effort by Alan D. Feldman, a former Pizza Hut financial executive, who will succeed Greenberg as head of domestic operations.
  • Feldman has a strong background in finance and is expected to bring analytic skills to the role.
  • McDonald's has been under pressure to improve its corporate culture, product introductions, and U.S. sales growth, with analysts giving the company 12-18 months to show a turnaround.
  • The company is expected to make further outside hires in the near future, including a high-profile marketing executive to replace the recently departed Brad Ball.
  • Greenberg's "silver bullets" include reducing corporate overhead and introducing a new cooking system to improve food quality.

Statistics:

  • McDonald's shares rose 5% last week following the announcement of Greenberg's appointment as CEO.
  • The company's domestic sales are expected to remain flat or rise slightly in 1998, with an improvement expected in 1999.
  • Greenberg has a strong financial background, with 18 years of experience at accounting firm Arthur Young & Co. before joining McDonald's in 1982.
  • T. Rowe Price Associates Inc., which owns 1.4 million McDonald's shares, expects quicker decision-making under Greenberg's leadership.
  • Analysts believe McDonald's has an extraordinary number of talented employees, but is lacking in terms of outside perspectives.

Sources:

  • "McDonald's Moves With Care" by Robert A. Kilbourne (Wall Street Journal, March 1998)
  • "McDonald's Cuts Executive Pay" by Ron Starner ( Nation's Restaurant News, March 1998)
  • Interview with Jack M. Greenberg, McDonald's CEO (Source not specified)
  • Interview with Alan D. Feldman, McDonald's Head of Domestic Operations (Source not specified)