March 9, 2015 / 4:13 PM / in 3 years

McDonald's vows 'modern' makeover amid U.S. sales struggle

A McDonald's 10 piece chicken McNuggets box is photographed at the Times Square location in New York March 4, 2015. REUTERS/Shannon Stapleton

(Reuters) - McDonald’s Corp (MCD.N) on Monday vowed to remake itself as a “modern, progressive burger company” after aggressive competition from Chipotle Mexican Grill Inc (CMG.N), Chick-fil-A and myriad “better burger” chains bit into U.S. restaurant sales last month.

February ended the run of former Chief Executive Don Thompson. His short tenure included 2014, when falling profit, revenue and traffic resulted in one of McDonald’s worst years in decades.

Steve Easterbrook, a McDonald’s insider who led two UK-based restaurant chains before returning to the company in 2013, took the helm at the Golden Arches on March 1.

The company that virtually invented fast food has struggled to find the right recipe to meet diners’ growing appetite for healthier, fresher food.

In his first big move as CEO, Easterbrook last week announced that McDonald’s USA will switch to chicken raised with fewer antibiotics. The policy, which will affect McNuggets and other products sold in its roughly 14,000 U.S. stores, will put McDonald’s more in step with Chipotle and Chick-fil-A.

McDonald’s shares were up 0.8 percent at $97.90 at midday. The stock is up about 10 percent since Easterbrook’s promotion was announced in late January.

Sales at U.S. restaurants open at least 13 months dropped a steeper-than-expected 4 percent in February, contributing to the 1.7 percent decline in global sales for the month.

Analysts, on average, had expected a 0.7 percent fall for the United States and a 0.3 percent drop worldwide, according to research firm Consensus Metrix.

February sales results from Europe were slightly better than expected, but the unit that includes Asia continued to struggle with the after-effects of a supply chain scandal last year.

McDonald’s has been trimming complicated menus to speed up service; giving restaurant operators more control over aspects including regional food choices; testing customized burgers and sandwiches to compete with Chipotle, Subway and other popular restaurants; and tweaking advertising to emphasize “Lovin,” a play on the company’s ubiquitous “I‘m lovin’ it” tagline.

Still, one pension fund adviser on Monday renewed its call for McDonald’s to shake up its board.

“Today’s disappointing numbers underscore the widespread reforms McDonald’s requires ... and these changes must go beyond new management to include refreshing its stale and insular board,” said Dieter Waizenegger, executive director of the CtW Investment Group, which advises union pension funds that hold a small percentage of McDonald’s shares.

Reporting by Lisa Baertlein in Los Angeles; additional reporting by Sruthi Ramakrishnan in Bengaluru; editing by Savio D'Souza and Matthew Lewis

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