By Heather Haddon
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 (September 9, 2020).
Among American businesses, McDonald's Corp.'s record on race has
stood out: The burger giant was one of the first to back Black
restaurant owners half a century ago, and later it elevated
numerous African-Americans into top management, including as chief
More recently, though, that progress seems to have stalled. The
number of Black officers in the company's uppermost ranks of its
U.S. business fell to six this year from 42 in 2014, according to
company figures and those cited in a lawsuit. Black ownership of
McDonald's restaurants has slipped to 11.6% of U.S. franchises,
down from 12.7% in 2010, an analysis of records shows; another
count suggests the number of Black franchisees has fallen by half
since peaking in 1998.
McDonald's says that the total number of store owners and top
managers has shrunk over time amid reorganizations, but Black
employees and franchisees remain represented in the same
proportions as before. Still, McDonald's Chief Executive Chris
Kempczinski says the company must do more to boost minority
"We absolutely have more work to do," Mr. Kempczinski said in an
interview in late July.
McDonald's says it has begun to assess diversity across its
ranks, and is trying new initiatives, such as creating diverse
panels of employees to evaluate candidates for officer-level jobs.
It has also restored funding for its African-American employee
council, along with other internal diversity networks, after a
dropoff in support. The company said it would report on its
diversity goals annually.
Diversity and inclusion have become major topics of discussion
and soul-searching in corporate America in the past decade, but
Black professionals continue to have a harder time advancing than
other racial groups in white-collar professions. Despite some
bright spots, such as recent improvement in minority representation
on corporate boards, there are just three Black CEOs in the Fortune
500, and only 8% of people employed in professional roles are
Black, according to the nonprofit Center for Talent Innovation.
McDonald's was long ahead of other companies on Black
advancement. It bet on urban neighborhoods during the white flight
of the Civil Rights era and first sold a restaurant to a Black
operator in 1968. It offered Black entrepreneurs an opportunity to
build wealth and advance in American society at a time when they
were often shut out of ownership in other professions, according to
Marcia Chatelain, a history professor at Georgetown University and
author of the book "Franchise: The Golden Arches in Black
"Black franchisees are some of their strongest forces with the
brand," she said of McDonald's.
At one point in the late 1990s, McDonald's came close to
reaching a goal of having the percentage of Black owners equal the
percentage of the Black population in the U.S., said Reggie Webb, a
former chairman of the National Black McDonald's Operator
Association, whose family owns 16 stores in Southern
That focus included headquarters, then in Oak Brook, Ill., too.
The company, now based in Chicago, backed internal networking
groups for minorities, eventually hosting more than a half-dozen
groups including the McDonald's African-American Council. Around
23% of McDonald's 200 U.S. officers were minorities in 2006.
One former U.S. McDonald's executive recalled feeling surprise
on his first day meeting with senior leaders for the U.S. business
in 2009, because the number of fellow Black officers was rare in a
big company at the time.
One of those leaders was Don Thompson, an engineer recruited to
the company in 1990, who rose to become CEO in 2012. One of the few
Black CEOs to run a major U.S. company, Mr. Thompson boasted about
McDonald's commitment to diversity. Restaurant sales fell under Mr.
Thompson, who was replaced by Steve Easterbrook, then the company's
chief brand officer, in 2015.
When Mr. Easterbrook became CEO, he aimed to cut $500 million in
administrative expenses, largely through hundreds of buyouts.
McDonald's legal department oversaw the buyouts to prevent bias,
one former executive said, but the number of minorities working in
McDonald's corporate offices dropped as a result of the cuts. One
former manager said she and about a half-dozen Black colleagues at
similar levels left or retired from the company during that period,
and some felt they no longer had the same access to opportunities
as their white counterparts.
Vicki Guster-Hines and Domineca Neal, two McDonald's senior
directors from the Dallas office who filed a lawsuit against
McDonald's in January, allege in that suit that they were
discriminated against during the buyout years, citing demotions
during restructuring and what they describe as a hostile work
"It became clear that African-American stakeholders and their
priorities were no longer a strategic priority," Ms. Neal said in
McDonald's is defending itself against the discrimination
allegations filed in the U.S. District Court for the Northern
District of Illinois.
The company says six out of 34 of U.S. corporate officers are
Black and all 10 regional field-office heads are
minorities--figures that Mr. Kempczinski said he was proud of amid
the company's continuing efforts. "Beyond just numbers, it's how we
make people feel included," he said in the interview.
Funding for the company's diversity networks shrank during Mr.
Easterbrook's tenure, hurting the pipeline of minority candidates,
two former executives said. A photo from the McDonald's
African-American Council meeting in 2013 showed around two dozen
Black members at the level of vice-president and higher from the
U.S. business and headquarters; the majority have since left the
company, one former executive said.
Mr. Thompson, who founded a venture-capital fund in Chicago,
declined to comment for this article but has criticized the falling
numbers of diverse executives and franchisees since his departure.
"The focus got off of it. I will not say it was mal-intent, I will
just say it's no intent," Mr. Thompson said of McDonald's diversity
during a 2018 talk.
Some former human-resources department managers and one former
company executive told The Wall Street Journal they raised the need
for more emphasis on diversity in hiring with supervisors beginning
around 2015, but said they felt their concerns were ignored or
dismissed. McDonald's declined to comment.
Last month, McDonald's recently hired human-resources chief
Heidi Capozzi told employees to contact her directly if they felt
concerns weren't being addressed.
Mr. Webb said the push for franchisees to pay for expensive
store upgrades beginning in late 2016 disproportionately hurt Black
operators, since their sales are lower than those at the average
McDonald's in the U.S. McDonald's in 2017 offered to pay 55% of all
U.S. owners' costs associated with the upgrades.
"A lot of things done during that time were insensitively done,"
Mr. Webb said in an interview.
In a lawsuit filed Aug. 31, dozens of Black former franchisees
accused McDonald's of selling them stores in locations that they
say were destined to fail, as part of a "pattern of systematic and
covert racial discrimination." Citing figures from the company and
the National Black McDonald's Operators Association, the lawsuit
said the number of Black restaurant franchisees has fallen by half,
to 186 from a high of 377 in 1998.
The company has denied the allegations of discrimination and is
defending itself against the lawsuit. In the U.S., nearly 30% of
McDonald's franchisees are ethnically diverse, the company said.
McDonald's said that cash flow at Black-owned restaurants has
improved recently and it aims to help all of its franchisees
succeed, including through financial help. McDonald's said that in
recent months executives have held discussions with the National
Black McDonald's Operators Association about how to improve member
Write to Heather Haddon at email@example.com
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