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McDonald's strips out bureaucracy

Published 04/05/2015

McDonald's has 27 restaurants in Northern Ireland
McDonald's has 27 restaurants in Northern Ireland

McDonald's will have layers of bureaucracy stripped away so the company can move faster to keep up with changing tastes, chief executive Steve Easterbrook said today.

During a 23-minute video message posted online, Easterbrook said the company's structure is too cumbersome.

Easterbrook took charge of the world's biggest hamburger chain on March 1.

McDonald's is restructuring its units into four groups: the flagship US market, international lead markets such as Australia and the United Kingdom, high-growth markets such as China and Russia, and the rest of the world.

Easterbrook also repeatedly stressed that the company will focus more on listening to customers, simplifying restaurant operations and improving perceptions of its food.

The company will also accelerate plans to sell company-owned restaurants to franchisees.

Easterbrook said the company's structure is too "cumbersome" and that it can no longer afford its "legacy structure".

"The reality is our recent performance has been poor. The numbers don't lie," he said.

The company also plans to cut 300 million dollars (£198m) in costs by around 2017. The company said it's too early to say how that will affect jobs.

It will be 90% franchised globally over the next four years, up from 81%.

The "turnaround blueprint" comes as McDonald's is fighting intensifying competition from a variety of players and has admitted that it failed to keep up with changing tastes.

Sales in Asia took a big hit after a controversy over a major supplier, and business in Europe has been weak. Its profit dropped 15% last year.

In its flagship US market, executives said the menu got too complicated and gummed up operations. Customer visits at established locations declined for two straight years.

Already, McDonald's has tried a number of moves to inject some life back into its brand.

Back in December, it said it would start trimming its menu to simplify operations and make room for new offerings. More recently, it began testing an all-day breakfast menu in San Diego, revamped its grilled chicken recipe and said it would curb the use of antibiotics.

The company also said last month that it would double its planned restaurant closures this year to roughly 700. It hasn't yet revealed its updated plans on overall restaurant count growth. At the end of last year, McDonald's Corp. had more than 36,200 locations around the world.

Easterbrook, who previously headed the U.K. business, has described himself as an "internal activist" and says he wants to turn McDonald's into a "modern, progressive burger company".

The turnaround plan comes ahead of the company's annual shareholder meeting on May 21 in Oak Brook, Illinois.

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