By Micah Maidenberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 6, 2019).
McDonald's Corp.'s new chief executive is taking full
responsibility for the plan he helped design for the company to
upgrade its restaurants and lure in more diners.
Chris Kempczinski, who spent much of his career selling products
as diverse as bottled water and macaroni and cheese, took over as
CEO after the McDonald's board on Friday fired his predecessor,
Steve Easterbrook, for a relationship with an unnamed company
employee.
Mr. Easterbrook hired Mr. Kempczinski in 2015 from Kraft Heinz
Co. to focus on strategy, business development and innovation. In
January 2017, he took over as president overseeing the U.S., where
the fast-food chain derived more than one-third of its revenue last
year.
Shortly after he took over the U.S. business, McDonald's moved
to refocus on its core customers and set out to modernize its
domestic restaurants by asking franchisees to remodel stores and
introduce new equipment such as self-ordering kiosks.
Some 9,000 restaurants in the U.S. have been renovated, but the
initiative frustrated some franchisees who say they haven't seen
much of a return on their investment amid declining customer
visits. In 2017, McDonald's offered to pay 55% of the cost for the
changes, with operators picking up the rest. The company in August
2018 said it would invest $6 billion together with its franchisees
to modernize restaurants.
Travis Heriaud, a franchisee who runs 22 McDonald's restaurants
in the Phoenix area, credited Messrs. Kempczinski and Easterbrook
for articulating a vision to remake McDonald's amid major shifts in
the restaurant industry.
Of Mr. Kempczinski, whom he worked with as chairman of an
operators' advertising fund, Mr. Heriaud said: "His style is very
analytical. He has a way of really simplifying complex
opportunities."
Mr. Kempczinski, known as Chris K. within McDonald's, was the
public face of the transformation, which executives say will offer
a competitive advantage over time. But making pricey investments
while traffic counts have fallen has frustrated franchisees. Some
say they are skeptical of Mr. Kempczinski's status as a relative
newcomer to the company.
The typical McDonald's restaurant in the U.S. generated about
$360,000 in cash flow annually, an executive said in March, down
roughly $30,000 from two years earlier. Franchisees have formed an
independent association to press their interests.
Franchisees operated 93% of the company's nearly 38,000 stores
across the globe last year, McDonald's said.
"The history of McDonald's is you earn your credibility by being
an operations person," said Richard Adams, a consultant who works
with McDonald's operators. "Chris K. is the first person to run the
U.S. who has zero experience doing that."
Mr. Kempczinski said in an interview Sunday that operators are
enjoying a record year for cash flow. Average cash flow for
franchisees has grown for 11 consecutive months through September,
executives said last month.
"We have about 2,000 owner-operators in the U.S. It's a place
where there is always lively debate," Mr. Kempczinski said.
Mr. Kempczinski wrote in an email to employees, franchisees and
suppliers after his promotion that each part of the company was
vital to success, as was customer feedback. He said he would hold a
global town-hall meeting with employees Wednesday.
"I'll share a bit more about my background and perspective, but
most importantly, I'd like to hear from colleagues around the
world," he wrote.
An avid marathon runner, Mr. Kempczinski eats McDonald's ice
cream every day, the company said. The married father of two was
born in Boston and describes himself as a sports fan, especially of
Duke University, where he earned a bachelor's degree in 1991. Mr.
Kempczinski worked for consumer-products company Procter &
Gamble Co., and earned an M.B.A. from Harvard Business School in
1997, and later took a job at Boston Consulting Group, the Boston
Globe wrote in 2000.
He left Boston Consulting in 1999 to work as director of product
management for an internet portal called Myway.com, according to
the Globe. Mr. Kempczinski didn't stay long at the website. "It was
a real seat-of-the-pants business style that was totally new to
me," he told the newspaper.
He joined PepsiCo Inc., where he worked to sell noncarbonated
drinks, including Aquafina and Lipton teas. He later went to work
for Kraft and moved through roles focused on packaged dinners,
Kraft Macaroni & Cheese and the company's Canada division.
In Canada, his team wanted to create protein drinks under the
Philadelphia Cream Cheese brand, said Barry Calpino, a consultant
who worked with Mr. Kempczinski at Kraft.
"He was just known as a guy you could give the point to on a big
strategy project," Mr. Calpino said in an interview, adding that
Mr. Kempczinski also worked at Kraft on new marketing for
Velveeta.
As Mr. Kempczinski takes the top job at McDonald's, the company
has also faced criticism from labor organizers and #MeToo activists
who say the company must do more to address harassment in
restaurants. McDonald's said in August it would implement
antiharassment training for roughly 850,000 workers in 14,000
restaurants in the U.S.
Mr. Kempczinski said at The Wall Street Journal's Global Food
Forum in October that McDonald's always tries to act responsibly,
mentioning efforts related to workplace safety and climate change.
He said, though, that the quality of its products remained the
company's main focus.
"I've worked in the food industry a long time," he said. "The
consumer ultimately buys on taste."
--Heather Haddon contributed to this article.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
November 06, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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