McDonald’s reveals initial steps, leadership team for turnaround plan

Oak Brook, Ill. – McDonald’s Corp., which recently reported a 33% year-over-year decline in profits for the first quarter of fiscal 2015, is revealing the first steps of its turnaround plan. Beginning July 1, 2015, McDonald's will operate under a new organizational structure with the following market segments:



• U.S.: The company's largest segment, accounting for more than 40% of the Company's 2014 operating income;



• International lead markets: Established markets including Australia, Canada, France, Germany and the U.K., which collectively represented about 40% of the company's 2014 operating income;



• High-growth markets: Markets with relatively higher restaurant expansion and franchising potential including China, Italy, Poland,Russia, South Korea, Spain, Switzerland and the Netherlands. Together these markets accounted for about 10% of the company's 2014 operating income; and



• Foundational markets: The remaining markets in the McDonald's system, each of which has the potential to operate under a largely franchised model. Corporate activities will also be reported within this segment.



The leadership team for McDonald’s new segments, effective July 1, will include Mike Andres continuing to serve as president; Doug Goare, currently president McDonald's Europe, becoming president international lead markets; Dave Hoffmann, currently president McDonald's Asia/Pacific, Middle East and Africa (APMEA), becoming president high-growth markets; and Ian Borden, currently CFO McDonald's APMEA, becoming president foundational markets.



Other plans include:

• Refranchise 3,500 restaurants by the end of 2018, accelerating the pace of refranchising and increasing the global franchised percentage from the current 81% to about 90%. This builds on a prior plan to refranchise at least 1,500 restaurants by 2016;



• Deliver approximately $300 million in net annual G&A savings, most of which will be realized by the end of 2017, in connection with the organizational restructure, refranchising strategy, and more stringent spending discipline; and



• Return $8 billion to $9 billion to shareholders in 2015 and to reach the top end of its three-year $18 billion to $20 billion cash return to shareholders target by the end of 2016.