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McDonald's up 3.4% afterhours on CEO's exit

After months of lackluster results, McDonald's board has named a new CEO.

Steve Easterbrook, 48, the company's chief brand officer, will replace Don Thompson, 51, the current CEO and a 25-year McDonald's veteran, effective March 1. Thompson also gives up his board seat and Easterbrook gets one.

Investors cheered: McDonald's stock (MCD) jumped 3.4% in after-hours trading following the news.

As chief brand officer, Easterbrook was leading McDonald's efforts to elevate its global marketing, advance menu innovation, and create an infrastructure for its digital initiatives.

The ouster comes after months of declines, criticism and change at the world's largest fast-food chain. McDonald's global same-store sales have been declining for months, as have its comparable store sales in the U.S.

McDonald's stock is down 14.5% from its highest point in the past year and was down 3.4% for 2014, while broader markets rose in double digits.

Just last week, McDonald's posted terrible fourth-quarter results, with a 21% drop in earnings and declines in store traffic of 3.6% globally and 4.1% in the U.S.

The change, says one industry guru, was inevitable. "Things just couldn't go on like this forever," says Christopher Muller, professor of hospitality at Boston University.

What's more, Easterbrook won't have an easy time of it — particularly in the short run, says Muller. "The students in my classes don't even think of going to McDonald's. They've been taught not to go there since they were kids.

"His challenge is immense. He's got a whole generation that wants nothing to do with McDonald's."

That generation of Millennials increasingly is turning to so-called fast-casual concepts like Chipotle and Panera, where the food is high-quality, the atmosphere is comfortable — and the prices for a full meal are typically several bucks higher.

McDonald's, at 66, is feeling its age. But it's trying to make a pile of changes overnight that seem unusually ambitious to some — if not unlikely.

  • It recently began a new ad campaign that portrays the chain as ultra-concerned about how consumers view the quality of its food.
  • After years of bloating its menu, it recently began to cut back on menu items to focus on what it does best and save costs.
  • Most recently, it began experimenting in some Southern California locations with a menu that lets folks walk up to a kiosk tablet and personalize their burgers or chicken sandwiches with several dozen offerings.
  • In announcing his retirement, Thompson said, in a statement: "It's tough to say goodbye to the McFamily, but there is a time and season for everything. I am truly confident as I pass the reins over to Steve, that he will continue to move our business and brand forward."

    Said Easterbrook: "I am honored to lead this great brand, and am committed to working with our franchisees, suppliers and employees to drive forward our strategic business priorities to better serve our customers."

    In other moves in the shuffle at the top, the board named CFO Pete Bensen to the newly created role of chief administrative officer, reporting to Easterbrook, Kevin Ozan, currently corporate controller, will become CFO and report to Bensen. Ozan has held senior positions finance, investor relations and accounting. Both moves are effective March 1.

    McDonald's has more than 36,000 locations in more than 100 countries, with about 80% of the restaurants owned and run by franchisees.

    Source: usatoday.com