CHICAGO--Marketing plans, franchisees and more company executives will be affected by the ongoing reorganization at McDonald's, which this week realigned five U.S. divisions into three and named three existing regional presidents to head the new east, central and west units.
"They're keeping this very hush-hush," said a regional McDonald's agency source about the company's tight-lipped communications policy. "We're all waiting for the meeting next week to know what's next."
At that meeting, scheduled for Oct. 17, McDonald's said it will "fully outline its plans to become more nimble and flexible for the future." Layoffs are expected among staff at its headquarters in Oak Brook, Ill., and regional offices. The company also expects 2,500 franchisees to be cut.
In the just announced management changes, Henry Gonzalez moves from the northeast to the new east division, Ralph Alvarez of McDonald's Mexico takes over the central division and Don Thompson's role moves from the Midwest to the west. All three will continue to report to Mike Roberts, cost-cutting president of McDonald's USA since June 1.
Roberts called the change "part of an ongoing change management process [that] centers on our restaurants and improving our customers' experience." The division reorganization is intended to improve communications between McDonald's headquarters and restaurants. It is also expected to take back much of the autonomy given to franchisees in 1997, when the five-division system was implemented.
McDonald's has posted profit declines for the past three quarters. Customers have complained about store cleanliness, service times and food quality. Problems with mad cow and foot-and-mouth diseases also have weakened sales in Europe.