McDonald’s restructures organisation in turnaround plan

By Aidan Fortune

- Last updated on GMT

McDonald’s is to restructure its organisation in response to flagging sales
McDonald’s is to restructure its organisation in response to flagging sales

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International fast food chain McDonald’s has announced a turnaround plan to counteract recent poor performances.

Citing three goals – driving operational growth, returning excitement to the brand and unlocking financial value – Steve Easterbrook, president and chief executive officer outlined the first steps of the plan.

“The immediate priority for our business is restoring growth under a new organisational structure and ownership mix designed to provide greater focus on the customer, improve our operating fundamentals and drive a re-commitment to running great restaurants.

“The first critical step of our operational growth-led plan is to strengthen our effectiveness and efficiency to drive faster and more customer-led decisions. We will restructure our business into four new segments that combine markets with similar needs, challenges, and opportunities for growth.”

Under the plan, which comes into effect on 1 July, the business will be split into four segments: the US; international lead markets which include Australia, Canada and the UK; high-growth markets such as China, Italy and Russia; and foundational markets, which have the potential to operate as a franchised model.

It is hoped that the restructure will help more closely align similar markets and reduce bureaucracy.

The chain also plans to refranchise 3,500 restaurants by the end of 2018, increasing the global franchise percentage to 91% in an effort to “generate more stable and predictable revenue and cash flow streams”​.

This turnaround plan comes after its global like-for-like sales fell 2.3% for the first quarter of 2015, while consolidated revenues decreased by 11% and consolidated operating income fell by 28%.

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