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McDonald's reorganizes
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July 9, 1997: 7:40 p.m. ET
Fast food chain says decisions will be made closer to restaurant franchisees
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NEW YORK (CNNfn) - In yet another move to revive its flagging market share, McDonald's Corp. said Wednesday it is decentralizing its management structure.
McDonald's will reorganize its U.S. business into five geographic regions, with each zone being led by a newly appointed president.
The company hopes to put decision-making and accountability closer to the actual franchise restaurants.
In the past, franchisees have chafed under McDonald's centralized structure. Chief among their complaints was McDonald's failed Campaign 55. Under that marketing effort, Big Mac hamburgers were priced at 55 cents during certain hours.
Franchisees worried the price cut would slice off some of their profits as well. McDonald's hoped increased sales would make up for the difference. That didn't happen. McDonald's actually lost market share to such competitors as Wendy's and Burger King. McDonald's dropped the price campaign last month.
"McDonald's operators want to focus on a food fight, they don't want a price war. They need better quality food in order to compete with the competition," said Susan Kezios, president of the American Franchise Association.
Under the reorganization, eight "zone officer" positions based at the company's Oak Brook, Ill., headquarters will be eliminated. The 40 U.S. operating regions that previously reported to those eight will now report to the five newly appointed presidents.
The company also announced that Edward Rensi will retire as president and CEO, citing family commitments. Jack Greenberg, currently vice chairman of McDonald's Corp., will immediately step into the role of chairman and CEO. The five new division presidents will report to him.
In a statement, Greenberg said the ultimate goal of the reorganization was summed up in the phrase, "line led, staff supported."
"We want the line -- which for McDonald's includes our divisional and regional staffs, owner/operators and restaurant personnel -- to make decisions on behalf of customers based on field operating needs. The line ultimately has responsibility and accountability for our business success," said Greenberg.
"We want staff functions to support line decisions and maximize their impact."
-- Randy Schultz
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McDonald's
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