New McDonald's chief faces kitchen heat

When Steve Easterbrook becomes chief executive of McDonald's in March, the former Watford Grammar schoolboy will take over a company facing one of the biggest challenges in its 60-year history.

Mr Easterbrook has a competitive streak. While at university in northern England he played cricket on a team captained by Nasser Hussain, who went on to lead the national team.

But turning round an $87bn company will be a whole new ball game.

The 48-year-old will take over a business coping with years of slumping sales and consumers who are opting for healthier, fresher alternatives to its Big Macs and fries.

On Wednesday, when it announced that Mr Easterbrook would replace Don Thompson, McDonald's also said it was conducting a "hard and thoughtful review" of its US operations. This will include an undisclosed number of lay-offs.

"We are moving with a sense of urgency to improve our performance and enhance our customer focus," the company said.

Mr Easterbrook, who joined the company as an accountant from PwC in 1993, will need to move swiftly.

One reason he was tapped for the job may be because Mr Easterbrook has turnround experience, back home in the UK. When he took over as chief executive of McDonald's UK in 2006, the chain was struggling against the perception that its food was unhealthy and that it exploited low-wage workers in "McJobs".

He set about transforming it through a campaign that included renovating stores so they looked cleaner, a marketing campaign that fought negative perceptions, and new apprenticeship programmes.

In a surprising turn just a month into his tenure, the soft-spoken accountant appeared on Newsnight to debate with Eric Schlosser, author of the anti-fast food bestseller Fast Food Nation.

Sales rebounded as he rose to become head of northern Europe in 2008, rising 10 per cent at the 1,200 UK McDonald's that year.

By 2010, he oversaw all of Europe's 7,000 outlets. But his new role will see the father of three leading a company with roughly 35,000 global restaurants.

The rocky two-and-a-half-year tenure of Mr Thompson was marked by flagging sales as the low-income customers continued to struggle after the financial crisis. It also coincided with the rise of more expensive burger chains such as Five Guys and Smashburger, and the explosive growth of restaurants such as Chipotle, in the 'fast-casual' sector.

Mr Easterbrook, who attended Durham University where he studied natural sciences, will hope to emulate the success of Mr Thompson's predecessor, Jim Skinner, who also took over when McDonald's was in crisis. During his eight years in charge the company's stock rose 200 per cent and same-store sales rose for 106 straight months.

A repeat performance will be difficult. Last year, McDonald's recorded its first annual decline in global same-store sales in a dozen years.

Some analysts questioned whether a McDonald's insider was the appropriate choice, given the foundational changes the company must undergo.

RJ Hottovy, analyst at Morningstar, said that, while Mr Easterbrook was a "suitable replacement . . . , we believe the company would benefit from additional outside perspective in its efforts to modernise customer experience and develop a more nimble organisation."

The company will need to be agile in markets around the world. The US, where McDonald's is the target of criticism over both the obesity epidemic and wage inequality, is not its only challenge. Operations in Germany, Japan, Russia and China are also struggling.

Consumers are no longer interested in food that is simply fast - they need to be convinced that it is, among other things, healthy, fresh and natural.

Mr Easterbrook's experience in the UK may again prove helpful. There, he set up composting programmes at some outlets, and introduced organic British milk, coffee certified by the Rainforest Alliance, and nutritional labels on the tablemats.

Soon after the UK turnround, Mr Easterbrook left in 2011 to become chief executive of PizzaExpress , only to leave that job after less than a year to head the Japanese noodle chain Wagamama . By 2013 he was back at McDonald's as chief brand officer.

In that position he was in charge of marketing and menu innovation, two areas where the company has faced criticism. In recent years McDonald's has added many items, including chicken wings and wraps, and created a menu that some argue is so bloated that it confuses customers and slows down service.

Mr Easterbrook's fingerprints also seem to be on one of the latest marketing campaigns, entitled "Our Food. Your Questions." It is meant to combat the image of McDonald's food as processed and unhealthy by allowing users to submit questions on a website that mirrors the makeupyourownmind.co.uk site Mr Easterbrook set up for UK operations more than five years ago.

But the questions consumers ask speak to the scale of McDonald's image problem: "Are there worms in your beef?" "Do you make your fries with real potatoes?"

In 2008, Mr Easterbrook was admitted as a visiting fellow at Oxford university, lecturing on corporate reputation.

He may need to dust off his notes.

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