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OAK BROOK, IL — McDonald's Corporation (NYSE: MCD) this morning announced that after 35 years with the company, McDonald's U.S.A. president Jan Fields will be replaced by global chief restaurant officer Jeff Stratton.
Fields, \57, was appointed to president in 2010, where she oversaw major business initiatives in McDonald's 14,000 U.S. restaurants. Fields finds herself out after new CEO Don Thompson received considerable pressure as sales fell for the chain in October for the first time in nine years. The company's third quarter results also softened nearly 4 percent as competitors Burger King and Wendy's sales rose.
Analysts say that management is struggling to raise revenue and please its franchise owners. In facing rough winds, the chain has withdrawn into the known. "Women don't do well at McDonald's," observes consultant Richard Adams about women in the upper echelons of management and Fields' departure. Adams is the founder of the consulting firm Franchise Equity Group and a former McDonald's executive who keeps a close eye on the world's largest burger chain.
In a confidential survey of 30 anonymous McDonald's franchise owners conducted early this fall by analyst Mark Kalinowski of Janney Capital Markets, franchisees expressed that they felt unusually gouged by the franchisor. Kalinowski noted that a survey of U.S. franchisees found them ranking the hamburger chain just slightly above fair in its future prospects. That was significantly lower than franchisees' historical ratings. The survey pushed Kalinowski early on to recommend only a neutral rating on McDonald's to stock investors.
One old-timer described a common theme among franchise owners of not so much facing a tough economy, but rather encountering artificially boosted fees by the franchisor on technology that was outdated and unreliable. "The technology is far behind what the competition is doing," the franchisee stated. "There are far too many would-be engineers making decisions on technology and equipment that have not been tested properly, nor are they cutting-edge. Top management is sacrificing the goose that laid the golden egg on the shareholder altar, where the directors can line management's pockets with stock options and fat bonuses, only to retire and start a business selling products at inflated prices to the system as sole source suppliers. There is no value built into the system for the operator."
More than 80 percent of McDonald's 34,000 restaurants worldwide are operated by franchsees.
Into the ruckus comes Jeff Stratton. McDonald's board of directors promoted the executive vice president and global chief restaurant officer to succeed Fields. Stratton, also 57, has a career at McDonald's that spans more than 40 years, beginning with his start as a crew member at a restaurant in Detroit. He held numerous U.S. field operations positions before becoming west division president in 2001. Shortly after, Stratton was promoted to chief restaurant officer for McDonald's USA, a role he held until joining the global team in 2005.
"Jeff personifies the meaning of career opportunity at McDonald's, from starting as crew, to holding numerous field management positions, to leading our U.S. business," said CEO Don Thompson. "His transition into this key leadership role reflects our deep bench of talent at McDonald's."
McDonald's watcher Adams doesn't think the changing of guards will have much of an impact on the sales wall that the hamburger giant now faces in the next six months as it tries to match the traffic during the extraordinarily mild winter last year. "I think we can expect more senior management changes," he declares.