McDonald's creates faster, leaner 'golden-arched' machine for future

McDonald's creates faster, leaner 'golden-arched' machine for future

The way the players line up under the golden arches — at least in the U.S. — has undergone significant change as the brand had earlier promised it would. In supplemental information released to investors this week, the chain's leadership said the modifications to the organization's home office and field-based corporate structure were made to enhance the brand's overall operating model, while supporting franchisees more fully and ultimately creating a more "dynamic and nimble" organization. 

For a chain that spans the globe with thousands of restaurants, operators and many more customers, the ability to move quickly and decisively as an organization is absolutely essential in a marketplace where changes are taking place at lightning speed. 

The chain identified five key focus areas behind the changes that scream better franchisee support systems and faster flow-thru on initiatives the fast food giant undertakes. According to the investor statement, those focus areas are: 
• More consulting and support for franchisees.
• Better communication between field and home office employees.
• Enhanced incentive alignment with owner-operators. 
• Improved complexity management and decision-making to hasten speed to market.
• Deliberate capability building and faster career progression for employees.

Accomplishing these goals in a mammoth, regionally structured organization takes some doing to say the least. The chain told investors that it will "eliminate its region structure in favor of field offices and remove layers from the field organization, while increasing resources in key strategic areas, like technology and field consulting."

The two-pronged focus of these efforts can be summed up as improved efficiency and owner-operator support. Hitting those key goals will ultimately improve what the customer receives the brand said, or in its words, delivering: "Hot, delicious food at a compelling value; fast, friendly service; and a convenient, enjoyable experience."

And the pace is fast on this initiative, with the chain vowing to be "fully transitioned" to its new field structure by Q3 2018. The ultimate business goal is simply to meet its promise to investors in 2019:

  • Realize net savings of about $500 million on general and administrative costs from 2015 to 2019.

This goal will be accomplished the brand said, though the chain will record a pre-tax charge of $80-90 million in Q2 2018 to pay severance "and other employee-related costs and costs associated with the closing of certain field offices."

The number of employees being laid off in the U.S. was not provided, although QSRweb has sent a follow-up inquiry to chain leadership for a response. 

Topics: Burger/Steak/BBQ, Business Strategy and Profitability, Financial News, Franchising & Growth, Human Resources, Operations Management, Workforce Management

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