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McDonald's shuffles execs
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May 19, 1997: 9:16 p.m. ET
Eliminates zone managers to improve ties with customers, franchisees
From Correspondent Bill Tucker
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NEW YORK (CNNfn) - If you're a McDonald's customer or franchisee, Ronald McDonald wants to get back in touch with you.
The fast food giant announced Monday that it plans to revamp the top management structure of its U.S. businesses to improve profits and build market share.
The plan to streamline its chain of command and listen more closely to its franchisees translates into dumping its eight zone managers and replacing them with a smaller team of regional executives.
The proposals come at a time when rivals Burger King and Wendy's are gaining market share. McDonald's is also coping with its failure to win over baby boomers with the Arch Deluxe sandwich, as well as a lukewarm response to its 55-cent Big Mac campaign.
McDonald's still reigns with 40 percent of the world burger market. Burger King and Wendy's follow with 17 percent and 12 percent respectively.
But McDonald's had a 42-percent market share 18 months ago, and analysts say a management realignment may not be enough to turn things around.
"If customers are wandering away from McDonald's, it's because the competitors have better food or better service," Smith Barney restaurant analyst Stacy Jamar said. "McDonald's needs to focus on a longer-term approach to making sure their food and service is up to what people expect." (126K AIF or 126K WAV)
The company already has slowed the rate at which it's building new stores domestically. The more than 12,000 stores in the United States were cutting into each other's business, and 1996 sales dropped at stores open more than a year.
Outside the United States, however, business is booming. International sales now make up 60 percent of the company's profits.
"The competitive issues that are problems here in the United States in terms of saturation and penetration are less significant and in many cases don't even exist internationally," said Bear Stearns restaurant analyst Joe Buckley.
More complete details of the planned management shakeup are expected to emerge at the annual shareholder meeting Thursday.
Shares of McDonald's closed up 1/8 at 52-1/8 in Monday trading. 
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