McDonald's replaces U.S. chief for the second time in two years

Fri Aug 22, 2014 3:26pm EDT
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By Lisa Baertlein

(Reuters) - McDonald's Corp is replacing its U.S. president for the second time in two years, a move that suggests increased pressure on Chief Executive Don Thompson to improve sales in the fast food chain's home market.

The company on Friday named former McDonald's executive Mike Andres as president of McDonald's USA, replacing Jeff Stratton, who had been in the job since December 2012. McDonald's said Stratton, 58, is retiring.

Since last November, the world's biggest fast-food chain by revenue has suffered flat or declining monthly sales at its established U.S. stores. Among other things, analysts blame bloated menus for slower service, and said pressure has intensified from resurgent rivals such as Wendy's Co and Burger King Worldwide Inc.

"It's hard to argue that this type of turnover doesn't put more scrutiny on a CEO," Bernstein Research analyst Sara Senatore said of the U.S. management change.

"If results stay weak despite turnover in these executive roles, then ultimately it's the responsibility of the CEO."

Thompson, who became president and CEO in July 2012, has presided over a period of disappointing results from the U.S. region due in part to internal missteps, brutal competition and cautious spending by the lower-income consumers that frequent the chain.

In selecting Andres, who currently is the CEO of Nashville-based Logan's Roadhouse, McDonald's took the "rare" step of choosing an outside executive to lead the U.S. business, said Hedgeye Risk Management analyst Howard Penney. Stratton was McDonald's chief restaurant officer prior to being named president of the U.S. division.

"They're desperate," said Penney, who is among Wall Street's most bearish restaurant analysts.   Continued...

A passersby walks in front of a help wanted sign at a McDonalds restaurant in the Brooklyn borough of New York, March 7, 2014.  REUTERS/Keith Bedford