McDonald’s Plans to Change U.S. Structure
Organizational Moves Intended to Bring Fast-Food Chain Closer to Consumers
McDonald’s is eliminating layers of management and creating a new organizational structure in the U.S. ASSOCIATED PRESS
McDonald’s Corp. is eliminating layers of management and creating a new organizational structure in the U.S. as it seeks to better respond to consumer tastes amid falling sales and profits.
The fast-food giant, which has acknowledged that some customers are leaving because of service problems and menus that they don’t find relevant, is planning to give leaders in its 22 U.S. regions more autonomy in making local menu and marketing decisions, according to a memo reviewed by The Wall Street Journal.
“The reality is that our current U.S. structure is not optimized for the customer,” McDonald’s U.S.A. President Mike Andres said in an email on Thursday to U.S. franchisees and corporate staff. “What has worked for McDonald’s U.S. for the past decade is not sufficient to propel the business forward in the future.”
As part of the change, the company is creating four zones—Northeast, South, Central and West—that it says will be organized around local consumer tastes and preferences. The new zone structure replaces one consisting of three divisions—West, East and Central—that rolled out new products across the entire division, from north to south. That meant that customers in Minnesota were being offered the same menu items, such as sweet tea, as those in Louisiana, which both fall in McDonald’s Central division.
Mr. Thompson said the chain plans to roll out technology to enable customers to order and pay for their meals digitally and to customize their orders. He also hinted at the organizational changes outlined in Mr. Andres’s email by saying that local markets would be given more autonomy to roll out products that are locally relevant.Chief Executive Don Thompson last week said the company was planning fundamental changes to its business, as it reported one of its worst quarterly profit declines in years and a 4.1% decline in September U.S. same-store sales. The drop was the worst monthly U.S. same-store sales performance since February 2003.
Mr. Andres, who was tapped in August to run the U.S. operation, said in his memo that as the country has grown more diverse, “we need to be more sophisticated in how we use local intelligence to address specific consumer needs. In short, we must evolve our culture and organizational structure to put decision-making closer to our customers.”
Each of the three existing divisions has had its own human resources and finance support staff. Most of those functions will now be handled through McDonald’s home office in Oak Brook, Ill. A McDonald’s spokeswomansaid the company hasn’t determined the number of jobs that will be eliminated in the restructuring because the new zone presidents haven’t had a chance to figure out their staffing needs.
“You’ve told us that there are too many layers, redundancies in planning and communication, competing priorities, barriers to efficient decision making, and too much talking to ourselves instead of to and about our customers,” Mr. Andres wrote. “If we want to grow beyond our current results, we need to evolve beyond our current model.”
