McDonald's Corp is replacing its US president for the second time in two years, a move that suggests increased pressure on Chief Executive Don Thompson to improve sales in the fast food chain's home market. The company on Friday named former McDonald's executive Mike Andres as president of McDonald's USA, replacing Jeff Stratton, who had been in the job since December 2012. McDonald's said Stratton, 58, is retiring.
Since last November, the world's biggest fast-food chain by revenue has suffered flat or declining monthly sales at its established US stores. Among other things, analysts blame bloated menus for slower service, and said pressure has intensified from resurgent rivals such as Wendy's Co and Burger King Worldwide Inc. "It's hard to argue that this type of turnover doesn't put more scrutiny on a CEO," Bernstein Research analyst Sara Senatore said of the US management change.
"If results stay weak despite turnover in these executive roles, then ultimately it's the responsibility of the CEO." Thompson, who became president and CEO in July 2012, has presided over a period of disappointing results from the US region due in part to internal missteps, brutal competition and cautious spending by the lower-income consumers that frequent the chain. In selecting Andres, who currently is the CEO of Nashville-based Logan's Roadhouse, McDonald's took the "rare" step of choosing an outside executive to lead the US business, said Hedgeye Risk Management analyst Howard Penney. Stratton was McDonald's chief restaurant officer prior to being named president of the US division.
"They're desperate," said Penney, who is among Wall Street's most bearish restaurant analysts. Still, Penney said Thompson likely has until the end of 2015 to show improvement in the business because some issues are seen by investors to be beyond his control, such as the US economy and Russia, which shut some of McDonald's branches in Moscow this week.
The Moscow closures were widely viewed as retaliation for Western sanctions against Russia Franchisees, investors and analysts have urged McDonald's to simplify its menus to better compete with the likes of In-N-Out Burger and Chipotle Mexican Grill Inc. Thompson has promised to get back to basics at McDonald's USA. At the same time, he is introducing new kitchen equipment that will allow diners to customise their hamburgers and sandwiches, a strategy that has fallen flat with critics.