McDonald’s Corp’s new chief executive officer said on Monday he would reorganize business units, sell restaurants to franchisees and cut costs in a bid to turn the fast-food chain into a "modern, progressive burger company."
The anticipated video announcement by CEO Steve Easterbrook left investors hungry for specific details on how the world’s biggest restaurant chain would try to improve consumer perceptions of food quality and slow service.
"I will not shy away from the urgent need to reset this business," said Easterbrook, who took the helm on March 1, following one of McDonald’s most dismal years on record.
Shares were down nearly 2 per cent in premarket trading, and closed 1.7 per cent lower at $96.13 on the New York Stock Exchange as investors digested the news.
"Judging by the immediate investor reaction, there appears to be more of a ’prove it’ sentiment among investors, rather than an full embrace of Mr. Easterbrook’s plan," Miller Tabak & Co analyst Stephen Anderson said in a client note.
Easterbrook said McDonald’s will sell 3,500 restaurants to franchisees by 2018, taking global franchisee ownership to 90 per cent from 81 percent. McDonald’s prior plan called for selling 1,500 restaurants by 2016.
He vowed to remove "cumbersome" management and scour the business for inefficiencies to find about US$300 million in net annual savings, most of which will be realized by the end of 2017.