Ralph Alvarez, McDonald's president and chief operating officer, has decided to retire from the company for health-related reasons, McDonald's CEO Jim Skinner has announced.
Alvarez said in a statement that he has undergone seven orthopedic surgeries over the years, including two knee replacements during the past six months, and experienced chronic pain. "After more than 30 years in the restaurant industry, the past 15 with this great brand McDonald's, I've decided to retire."
Alvarez's retirement is effective Dec. 31. He also has decided to resign as a member of the McDonald's board of directors.
"I know this was a difficult decision, but it was the right one for Ralph and his family," Skinner said in a news release. "On behalf of the entire McDonald's system, I want to commend Ralph for his many contributions to our business. McDonald's has benefited greatly from Ralph's leadership and commitment to operational excellence."
Alvarez, 55, joined McDonald's in 1994. He has held a variety of leadership roles throughout his McDonald's career, including president of McDonald's North America and president of McDonald's USA. Prior to that, he served as COO and president of the Central Division, both with McDonald's USA. Before joining the U.S. business, he was president of McDonald's Mexico.
During his time with the company, McDonald's overcame a number of challenges to rebuild itself into a company strong enough to withstand the recent economic recession as one of the few quick-service companies to maintain positive same-store sales. In the mid-1990s the company was floundering, having undergone unsuccessful menu changes, overzealous growth and attacks from health advocates. After implementing the company's Plan to Win, the company has focused on improving operations to get back in favor with customers.
Since then, the company has added healthy menu options, including salads for adults and apple dippers for children, and recently launched two new successful product lines: McCafe espresso-based coffees and Angus Third Pounders premium burgers. The company also has improved its drive-thru operations and revamped its stores' interiors to encourage more dine-in sales. The latest example is a European-based design that recently opened in Manhattan.
As a result of Alvarez's retirement, the company's Area of the World executive leadership team, responsible for the operation of McDonald's 32,000 restaurants worldwide, will now report directly to Skinner.
Some analysts had considered Alvarez to be the eventual successor to Skinner, 65. Skinner was named CEO in late 2004 when then-CEO Charles Bell retired to fight cancer. Bell, who died a few months later, had succeeded James Cantalupo, who had died earlier that year from a heart attack.
Analysts say that Alvarez's successor could be any of the company's division presidents, including Don Thompson, president of McDonald's USA, Dennis Hennequin, president of McDonald's Europe, or Timothy Fenton, head of the Asia-Pacific region, according to a story in Bloomberg.
From Bloomberg:
'All of the area-of-the-world presidents have a legitimate shot,' said (Larry) Miller, (an analyst with RBC Capital Markets in Atlanta) who has a 'sector perform' rating on the stock. 'They have a deep bench and the management team is pretty aware of the whole global business.'
McDonald's is the leading global foodservice organization with more than 32,000 local restaurants in more than 100 countries. About 80 percent of McDonald's restaurants worldwide are owned and operated by franchisees.
