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McDonald’s: Looking for ‘bold actions’

It’s no secret that McDonald’s has been struggling to keep up with fast-food peers like Wendy’s (WEN), and fast-casual restaurants like Chipotle Mexican Grill. At an investors breakfast this morning, CEO Steve Easterbrook discussed his plans to reverse McDonald’s fortunes. Citigroup’s Gregory  Badishkanian and team explain:

McDonald’s first priority is returning its key markets to growth and believes that this will provide the greatest shareholder value creation. Following this the company will address other financial priorities that don’t impact sales. President and CEO Steve Easterbrook is revisiting ways to enhance shareholder value and has not made any decisions (regarding levering balance sheet and creating a REIT), though the team articulated some reasons to maintain their current direction…

Management noted McDonald’s was not innovating at a fast enough pace and needed to operate with a greater sense of urgency (i.e. shortening the speed to implement an initiative). Management also didn’t have a high enough tolerance to risk…

Easterbrook said he can be considered an internal activist and constructive agitator. Steve looks for bold actions/changes in operational areas that are inefficient. Going forward McDonald’s seeks to maximize resource allocation (human capital, financial resources, and time) and will work on deciding which markets warrant additional resource investments.

Shares of McDonald’s have dropped 1.2% to $96.98at 10:43 a.m. today, while Wendy’s has fallen 0.4% to $10.72, and Chipotle Mexican Grill has declined 0.6% to $661.86.

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