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From lawsuits to 'factory food': 6 things wrong with McDonald's

The Board of Directors of McDonald's Corporation announced that President and Chief Executive Officer Don Thompson will retire March 1, 2015, after almost 25 years of service.

January 29, 2015 by Nicole Troxell — Associate Editor, Networld Media Group

1. Adjusting to new leadership

The Board of Directors of McDonald's Corporation announced that President and Chief Executive Officer Don Thompson will retire March 1 after almost 25 years of service.

The Board Elected Steve Easterbrook to replace Thompson as President and CEO. Easterbrook will also be a member of the Board of Directors, filling Thompson's vacancy.

"Steve is a strong and experienced executive who successfully led our UK and European business units and the Board is confident that he can effectively lead the Company to improved financial and operational performance," said Andrew McKenna, non-executive Chairman of the Board of Directors, in the company announcement.

"It's tough to say goodbye to the McFamily, but there is a time and season for everything," Thompson said. "I am truly confident as I pass the reins over to Steve that he will continue to move our business and brand forward."

Easterbrook brings experience as a senior executive vice president and chief brand officer of McDonald's. His initiatives include leading the company's efforts to elevate marketing, advance menu innovation and create an infrastructure for digital initiatives.

McDonald's also announced the appointment of Margo Georgiadis as director of the company. Georgiadis is currently president of Americas at Google, where she heads the company's businesses in North America and Latin America.

Previously, Georgiadis held senior level positions at Groupon, Discover Financial Services and McKinsey and Company. She brings experience in technology, marketing, consumer insight, strategy and business development, and risk assessment.

2. Falling profits

Besides adjusting to major leadership changes at McDonald's, the company announced its aggressive plan for change in an October earnings callafter Q3 profits fell by 30 percent.

McDonald's has been losing out not to just fast casual, with its often customized fresh food options, but also to QSR competitors Burger King (up 55 percent over the last year) and Wendys (up 25 percent). McDonald's quarterly sales were down 10 percent between June and December 2014 and an overall 6 percent for the year, according to Seeking Alpha, which warned investors to be wary of its stock.

3. A stale image

As McDonald's former CEO Don Thompson said in the earning's call, "The reality is we haven't been changing at the same rate as our customers. So we're changing and we're changing aggressively. The key to our success will be our ability to deliver a more relevant experience. We have listened to our customers and we better understand what their future experience should look like – personalized, local, a contemporary and inviting atmosphere and choices on how they order, what they order and how they're served."

Many consumers still view McDonald's food as "factory food," which at the heart of the matter, the article said, is the real problem. The value proposition – the lack of "real food," a complicated menu and inflated prices – is what's keeping the company from winning out over its competitors.

The company plans to roll out a simplified menu with more customization and local options as well as a broader digital experience designed to capture Millennial tastes. What Millennials want, according to the article, is value, meaning real food, from the money they spend.

4. Food safety scandal

To add to the company's problems, a July investigation revealed egregious food safety violations in China, including the sale of expired meat, reports of workers picking up meat off the floor and mixing expired with fresh meat. McDonald's responded with halting the supply of meat from its China-based distributor and implementing additional audits.

5. Accusations of discrimination and sexual harassment 

But it doesn't end there. A group of workers from a Virginia-based McDonald's announced in January that they are taking legal action against the corporation for racial discrimination and sexual harassment. The nine African American and one Hispanic workers are accusing the company of wrongful termination last year and of being replaced with mostly white workers by managers who believed there to be "too many black people [working] in the store," according to a Huffington Post article. Claims also allege "that women were harassed and groped and that minorities were subjected to racist taunts," the article said.

6. Alleged labor violations

Other lawsuits are attempting to hold McDonald's accountable for wage theft, the Huffington Post reported. Twenty-seven workers from California, Michigan and New York filed lawsuits alleging the company shorted their pay by violating minimum wage and overtime regulations, forcing them to work off the clock, and claiming illegal deductions from uniform costs. 

Image courtesy of Wikimedia

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