McDonald’s has fired CEO Steve Easterbrook after he engaged in a consensual relationship with an unnamed employee. The board voted on Friday to remove him, according to the Wall Street Journal. McDonald’s USA President Chris Kempczinksi was named the new CEO, effective immediately.
According to the WSJ, Kempczinksi noted he would maintain Easterbrook’s focus on tech, saying, “There isn’t going to be some radical strategic shift. The plan is working.”
Clearly, no sane executive in 2019 would reverse course on technology initiatives that could speed up and simplify restaurant operations while also meeting demand for delivery, convenience, etc. For McDonald’s, however, this executive shakeup could certainly slow the pace of change.
Under Easterbrook’s tenure, McDonald’s pursued an aggressive strategy around technology. In the last year alone, that included the acquisition of Dynamic Yield and subsequent rollout of the latter’s AI technology at McDonald’s drive-thru, buying up voice-tech startup Apprente and building a new tech innovation lab, expanding delivery with more third-party partners, and a heap of other developments that seem to land in the inboxes of us reporters every other day.
All this and more is part of McDonald’s Experience of the Future mandate for stores, an initiative that requires franchisees to update their store designs, invest in tools like self-order kiosks and new menu items (e.g., fresh beef), and curbside pickup.
Not surprisingly, McDonald’s franchisees have pushed back at these costly but not necessarily profitable changes. A recent Bloomberg article noted that “[Franchisees] object to the enormous costs of the project, which, for owners of several locations, can run into tens of millions of dollars, even with McDonald’s offering to subsidize 55 percent of the capital for the remodels.”
About a year ago, a group of U.S.-based McDonald’s franchisees formed the National Owners Association advocacy group to address some of these challenges. For example, franchisees were originally required to have their locations remodeled by 2020, a date that, after enough outcry, was pushed back to 2022 (albeit with caveats).
Easterbrook’s departure won’t stop tech innovation at McDonald’s. Nor should it. And to be clear, no one has officially yet stated any specific changes to the strategy. But the conversation around franchisee tensions has only grown louder in recent months, and under Kempczinksi’s leadership it’s possible McDonald’s could slow its pace on some of these developments or give franchisees more say in how to implement some of these initiatives without incurring some of their heavy costs. Meanwhile, McDonald’s has to somehow address its sluggish sales while still maintaining its edge over other QSRs, who are rapidly deploying self-order kiosks, AI in the drive-thru, and other high-tech solutions. Whether the chain can do that more effectively under Kempczinksi looks to be yet-another unanswered question in this ongoing McSaga.
