McDonald's CEO: We will accelerate refranchising
As part of McDonald's (MCD) plan to turnaround its business, the fast food giant plans to accelerate refranchising and overhaul its organizational structure to juice company results and modernize the fast food giant's struggling operations, CEO Steve Easterbook said Monday.
McDonald's plans to increase its franchise mix to 90 percent of its locations by 2018 from the current 81 percent as the company embarks on an "urgent need to reset this business," Easterbrook said in a video Monday, warning that progress will be "bumpy and uneven." The restaurant is also reorganizing its structure into four segments: U.S., international lead markets, high growth markets and foundational markets.
Following the turnaround plan's release, McDonald's stock turned lower. (Click here to track its shares.) (MCD)
Through the restructuring, refranchising and a more stringent focus on spending, McDonald's plans to deliver about $300 million in net annual general and administrative expense savings, most of which it says it will realize by the end of 2017.
Although McDonald's remains the world's biggest fast food chain, the burger behemoth has struggled to stabilize and improve its results for the past several quarters.
"The reality is our recent performance has been poor," Easterbrook said. "The numbers don't lie."
The company faces an uphill battle in turning around sales due to macro headwinds in Europe, lingering fallout from a supplier issue last summer in Asia and shifting consumer tastes and fierce competition in the U.S. A strong dollar has also hit the Golden Arches hard, crimping sales and demand in foreign economies.
After a long string of positive comps during the recession, McDonald's performance has flagged in recent quarters. The chain hasn't delivered positive same-store sales since first quarter 2014 globally, and third-quarter 2013 domestically, according to FactSet data.
More From CNBC
