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How The #MeToo Movement Led To McDonald’s CEO’s Ouster

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CHICAGO, IL – JUNE 04: McDonald’s CEO Stephen Easterbrook unveils the company’s new corporate … [+] headquarters during a grand opening ceremony on June 4, 2018 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

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The news of McDonald’s CEO Steve Easterbrook’s ouster from the company Sunday came less than two weeks after the company’s Q3 earnings report, and it will likely cause some heartburn among investors. 

Since taking the reins in 2015, Easterbrook has led the company through a significant turnaround, even as competition across the foodservice space has intensified. At the time of his appointment, shares were hovering under $100. Now, they’re just under $200 (peaking around $221 in early August). The company’s Q3 2019 earnings marked its 17th consecutive quarter of same-store sales growth. 

McDonald’s trajectory has been driven by a comprehensive transformation of the entire system, from operations to store designs to digital channels. This year alone, the company has poured hundreds of millions of dollars into acquisitions to help modernize the brand in an effort to meet the growing demand of consumers craving convenience. This included a $300 million acquisition of Dynamic Yield, which uses machine learning technology to personalize the drive-thru ordering experience. 

The changes have been aggressive and ambitious, but they have come with some franchisee push back, leading to the formation of the National Owners Association in late 2018. However, Easterbrook has since noted the relationship between corporate and franchisees has warmed. During the company’s Q2 call in July, Easterbrook said “we’re in a far better place … Ultimately, the mood of the operators, I think, is feeling much more confident.” Indeed, franchisee restaurant cash flow has increased for 11 consecutive quarters.

With all of this progress, one might wonder why a consensual relationship between two adults would lead to Easterbrook’s firing (and perusing the comments sections from a number of news outlets, many are wondering just that). But a glance at McDonald’s recent issues with sexual harassment answers the question clearly. 

As many as 90% of women and 70% of men in the restaurant industry have reported some form of sexual harassment, according to the Harvard Business Review. In an industry rife with sexual harassment, McDonald’s has dominated the headlines. From 2015-18, under Easterbrook’s watch, a total of 50 sexual harassment complaints were brought against the company. In 2018, McDonald’s employees in 10 cities went on strike to protest the company’s lack of progress on here.

To be fair, the company has made a number of efforts to rectify its issues, introducing new training in that started in October, working with RAINN to enhance its discrimination and harassment prevention policy and launching a free, anonymous hotline for employees, for example. 

For some, however, these efforts haven’t been enough. In late September, 115 government officials across 31 U.S. states wrote a letter to Easterbrook asking the company to better protect its workers. Some members of Congress wrote similar letters to the company. 

McDonald’s is hardly the only quick-service restaurant navigating this issue. A recent study found that 40% of women working at fast food chains experience sexual harassment at the workplace. But McDonald’s has a very large footprint and therefore attracts a brighter spotlight.

The sexual harassment issue is certainly a delicate one for restaurant companies to balance. Since the “Me Too” movement started gaining momentum a couple of years ago, allegations of sexual harassment have taken down some of the biggest names in the space, from Mario Batali to John Besh and Mike Isabella. Repercussions like these have finally forced companies to prioritize their policies and training models.

For McDonald’s, consensual or otherwise, it’s hard to claim real progress is being made if the boss is the one violating the company policy. Perhaps that’s why the company has already scrubbed the nugget about Easterbrook “sparking the evolution of its company culture” from its corporate website, as Yahoo Finance reported Sunday.

Chris Kemczinski, president of McDonald’s U.S., has been tapped to takeover Easterbrook’s role. He joined the company in 2015 from Kraft. Joe Erlinger, who most recently served as president of international operated markets, has been moved into Kemczinski’s position. He has been with McDonald’s since 2002. 

In an interview with the Wall Street Journal Sunday, Kemczinski said, “There isn’t going to be some radical, strategic shift. The plan is working.” Some analysts were bullish on the company following its Q3 report. Time will tell if they’ll remain so, but Kemczinski’s comments should ease some of the heartburn for now–as long as that “plan” includes some culture changes.

Original Article Source…


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