Can the CEO of McDonald’s Survive?

By Douglas A. McIntyre Published Aug 15, 6:50AM EDT

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The McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) board of directors needs to decide if following the example set by Starbucks Corp. (NASDAQ: SBUX) might turn the company around.
The coffee shop operator now has a “change agent CEO.”
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McDonald’s Corp. (NYSE: MCD) stock chart looked like that of Starbucks Corp. (NASDAQ: SBUX) for over a year. Both declined as same-store sales started to turn ugly and were not helped much by recent earnings. The Starbucks chart suddenly improved sharply as the company hired Chipotle CEO Brian Niccol. Niccol was so important to his new board that they awarded him a pay package of $133 million, which included a long-term incentive.

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McDonald’s board must decide if it also needs a “change agent CEO” to turn the fast-food company around. Chris Kempczinski has led the company since he took the board chair role last March and has been CEO since November 2019. He has been a company man since he joined McDonald’s as an executive vice president in 2015. Boards often look to outsiders to fix severe and long-term problems.

Like Starbucks, McDonald’s same-store sales declined in the last quarter, down 1% compared to last year. Earnings dropped from $3.17 per share to $2.97.

McDonald’s has launched a $5 meal deal to bring back customers. Several competitors matched this. It appears that the idea has not worked well. According to TheStreet, “Now, more than a month after the menu made its debut, McDonald’s is reportedly failing to see it boost foot traffic at its restaurants, according to BTIG analyst Peter Saleh, who analyzed a series of franchise checks conducted by his firm.” There is also a question about whether the deals are profitable.

Many were surprised when Niccol was hired at Starbucks. How could any CEO fight a battle against higher-priced menu items? How could anyone get people who think food is too expensive to change their minds? The Starbucks board believes Niccol can work some magic. It is the kind of magic McDonald’s needs as well.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.