CHINA TOPIX

11/02/2024 09:37:29 am

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McDonald’s CEO Battered by Bad News In July

A customer using his mobile phone is seen next to a McDonald's logo at a McDonald's store in Tokyo July 22, 2014.

Don Thompson is probably having the worst month of his career as McDonald's Corp's CEO.

In the final days of July, the fast-food giant McDonald's faced headline-grabbing issues across the globe.

First off, it was hit by a food-safety scandal in China involving a key supplier; the chain was accused by Russian government with nutritional and safety codes violation; U.S. federal agency claimed McDonald's was jointly liable for the employment actions of its franchisees; and, a Texas jury awarded the company with US$27 million verdict for the deaths of two teenagers in 2012. The sum of it all resulted a higher-than-expected drop in the company's second-quarter earnings.

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Restaurant analyst Howard Penney said that McDonald's is "under siege" across the three continents.

Issues in various parts of the world are directly and indirectly affecting the company's brand, according to a statement released by the company.

McDonald's have 35,000 restaurants in 120 countries, and a communications team with skilled professionals in each of its area worldwide.

As stated, dealing with a 24/7 news cycle around the world is a standard action in the company, as well as making sure that the communications teams address such issues for the company to keep its focus on serving customers.

Analysts said the latest external events post manageable risk to McDonald's profit, but they remain a headache at a time when the company is struggling to battle over its competitors with the aim of broadening its audience and increasing sales through shifting consumer tastes and service slow-down stemming.

They said that the company needs to find a way to stand out from the crowd.

Analysts, investors and franchisees are also protesting for the company to end its campaign to be "all things" for the people. They want it to simplify its complex menu and point to the success of rivals Chipotle Mexican Grill Inc and In-N-Out Burger, which have boosted customers by selling just a few items.

In relation to that, McDonald's executives have promised to increase sales next year by focusing on digital advertising, value and quality of its food.

As for Thompson, Penney predicted that it's too soon for him to go anywhere. He added that the CEO will survive the current crises and have more time to fix the long-term problems until 2015.

Meanwhile, Thompson remained unavailable for comment.


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