McDonald’s Corporation (MCD) Turnaround Initiative To Help It Save $300 Million Annually Along With Boosting Sales


McDonald’s Corporation (NYSE:MCD) has an ambitious turnaround plan that is expected to enable the restaurant chain to take greater control on cost and boost sales. The company is looking to expand the number of franchises and reform its structure all in the efforts to spur growth that has been difficult to attain in the present arrangement.

Weakness in McDonald’s Corporation (NYSE:MCD) is something that even the new CEO, Steve Easterbrook, admits exists. Easterbrook recently said in a video tape that a number of missteps and inefficiencies have impeded the growth of McDonald’s and they have got to change that as soon as possible.

McDonald’s is facing a painful slump in sales both in the U.S. and abroad. In the most recent quarter, the company reported 11% decline in revenue while profit plunged 30%.

Raising franchise profile to 90%

Under the just unveiled turnaround plan, McDonald’s Corporation (NYSE:MCD) intends to put greater emphasis on the expansion of franchised restaurants. By the end of 2018, the company expects raising the profile of franchised stores to 90% from the current 80% of its mix.

The idea behind franchised store drive is that Easterbrook hopes such a move would lead to about $300 million in annual cost savings in addition to stabilizing cash flows.

Replicating success strategies

McDonald’s Corporation (NYSE:MCD)’s Easterbrook has already declared himself an “internal activist”, suggesting his desire to do away will legacy structure in the company and replace it with a system that is able to inspire long-term growth. Some of the measures that Easterbrook hopes to take are disbandment geographical segmentation of markets and promoting stronger collaboration.

Allowing markets to collaborate more easily will promote replicating of successful strategies in other markets, boosting overall sales in the process.

At the end of the day, McDonald’s Corporation (NYSE:MCD) should be a leaner organization that is able to move faster and take up opportunities as they come.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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