Since early 2015, when Steve Easterbrook was named McDonald’s CEO, the fast-food giant’s stock has more than doubled. It is 46-percent higher so far in 2017 alone. In fact, it hit all-time highs every single day this week.
In 2015, McDonald’s was coming off two years of declining sales and profits. Don Thompson stepped down after nearly three tumultuous years, and Easterbrook, who spent much of his career in Europe, took over the job of CEO.
It has not been sunny skies for McDonald’s in Easterbrook’s reign as quarterly reports have been a bit of a roller coaster. However, Easterbrook, who is in his third year as CEO has managed to keep the company focused on a few core objectives. Key among those is technology and its effect on how customers experience the brand.
Easterbrook first unveiled his turnaround plan in May 2015. “The immediate priority for our business is restoring growth under a new organizational structure and ownership mix designed to provide greater focus on the customer, improve our operating fundamentals, and drive a recommitment to running great restaurants,” he said at the time.
Easterbrook also announced McDonald’s plans to refranchise 3,500 restaurants through 2018. All of this expected to save the brand $300 million annually. McDonald’s long-term goals included returning $22 billion to $24 billion to shareholders through dividends and share buybacks over the ensuing three years.
His menu changes were equally compelling. All-Day Breakfast, fresh beef Quarter Pounders, cage-free eggs by 2025, removing artificial preservatives from Chicken McNuggets, eliminating high fructose corn syrup from the buns used on Big Macs, Quarter Pounders, hamburgers, cheeseburgers, Filet-O-Fish, and McChickens.
In terms of innovations, McDonald’s put mobile order and pay in 20,000 restaurants by the end of this year. as well as delivery in 3,500 restaurants this past summer. McDonald’s is also planning to reimagine 650 restuarants this year to the “Experience of the Future” restaurant design, which contains kiosk ordering and table service. McDonald’s also has said it intends to update most of its free-standing U.S. locations by the end of 2020.
Most recently, McDonald’s announced that a tiered, new dollar menu called the $1 $2 $3 menu, is coming in January. This should further the brand’s success with premium items offsetting value-based ones.
Perhaps the best metric for McDonald’s is guest count. Customer traffic dropped in each of the last three fiscal years before they started to climb in 2017. The chain welcomed 0.6 percent more customers in the first quarter. That improved to 1.8 percent in the second quarter—a period that saw same-store sales grow 6.6 percent—the brand’s best comps growth in five years. In the third quarter, guest counts rose 2.1 percent. Same-store sales, by the way, are up 5.6 percent through the first nine months of the year.
While McDonald’s has posted year-over-year revenue declines for 14 consecutive quarters, much of that can be attributed to refranchising. More than 90 percent of the company’s 37,000 locations worldwide are franchised. This year, McDonald’s reached its target of refranchising 4,000 restaurants more than a year ahead of schedule after refranchising locations in China and Hong Kong. Over the past three years, McDonald’s has increased its franchised unit ratio from 81 percent to 91 percent of all units.
Analysts say, however you view it, it is hard to refer to McDonald’s current success as a turnaround story anymore. That bar has been hurdled. Now, it is just a matter of seeing how high the brand can climb.
