McDonald’s Corporate Reorganization Plan & Marketing Strategy
In a memo sent to McDonald’s corporate offices around the globe, CEO Chris Kempczinski and the executive team will review corporate staffing and evaluate measures to cut down on an “outdated and self-limiting” corporate structure.
According to BBC, there’s about 200,000 corporate roles, with 75% of them located outside of the US, that are at stake during this reorganization process. Jobs cuts are to be announced by April.
While there’s been a massive amount of layoffs in the tech sector, multi national companies like McDonald’s have went under the radar during this tumultous time for the global economy.
Writing for FranchiseWire, Mary Vinnedge explains the rationale for McDonald’s reorganization plan according to three main points:
- capturing increased demand in global markets
- adapting to disruptions in the food & beverage industry with digital programs and offerings
- investing in local consumer market preferences across U.S., Europe and Asia.
These main points are critical for McDonald’s investment portfolio. That’s why shareholders and other investors should be carefully paying attention to how the company’s strategy for expansion unfolds in the near-term.
On the New York Stock Exchange (NYSE), McDonald’s stock (MCD) responded to the news about this reorganization plan on 6 January 2022.
The MCD stock price was at $262.16 on January 5 and then increased to $269.47 on the January 6. It took a few bumps and slides from January 6–12, but regained its momentum by jumping from $266.69 on January 12 to $274.11 on January 17. It then dropped fiercly to $263.58 by January 19.
Since then, the MCD stock has been increasing toward a one-month high. It sold for $274.11 on January 17 and $274.72 on January 26. The highest price it has sold for in the last three months was $278.40 on November 8, 2022.
Even though McDonald’s reorganization plan isn’t the most popular topic in business and stock investor’s news — Tesla (cough, cough) — the existence of the golden arches have been the close attention of some of the latest geopolitical scenarios in Russia, Ukraine and Kazkahstan.
Sanctions on Russia have taken its toll on several American and European companies operating in Russian markets. Anton Krutikov covered the story about Russia sanctions and its impact on the golden arch’s post-Cold War legacy in McDonald’s in Russia is Back. Now it’s Even Better.
At the beginning of the year, McDonald’s also announced that it would be leaving Kazakstan due to supply shortages during the Russia-Ukraine conflict.
These geopolitical events reveal how McDonald’s must re-focus on a new corporate expansion into global markets. As they wish to open new offices and restaurants, thus expanding their brand to new consumers; this is the ultimate strategy to successfully capture wider audience engagement through global footprint. I have already written about these similiar investment themes for Nestle & Starbucks and John Deere & Wal-Mart.
For McDonald’s, however, international marketing is a key feature of the company’s success. McDonald’s launched its original “Accelerating the Arches” strategy in 2020. The first pillar of this strategy is to “Maximize our Marketing” followed by “Commit to the Core” and “Double Down on the Three D’s” — Digital, Delivery and Drive-Thru.
In order to accelerate international business growth and consumer acquisition, the Accelerating the Arches 2.0 strategic plan unveils how McDonald’s intends to carry out this acceleration through “Development” — the fourth D — by which the reorganization plan comes back into the discussion. By cutting jobs, the company can invest more in technology and digital marketing opportunities. This is essential to keep up with its international competitors, of which they could easily lose an advantage over the local consumer market preferences.
In the lead up to the reorganization plan, there was also a shift in corporate leadership. Morgan Flatley was named as McDonald’s new Chief Marketing Officer (CMO) in August 2021. Flatley famously oversaw the “Famous Orders” campaign featuring musicians Travis Scott and BTS in 2020.
At an investors presentation on 27 October 2022 McDonald’s CEO Kempczinski attributed the success of the company’s Q3 2022 earnings to the marketing campaign, saying it was “an important growth driver.” He shared a story about the McRib Farewell Tour and Happy Meals to share how important marketing was for the future of the company’s growth story.
Technology investments in the UK were also paying off, as more and more customers in UK are seeking digital channels for their McDonald’s purchases. In fact, McDonald’s went viral on TikTok when a customer posted that he had been given $5,000 in cash along with a breakfast order. This digital channel is a big part of the upcoming generations’ engagement with brands and consumption. Just look at the responses on TikTok provided by FoodBeast.
The TikToker, named Josiah Vargas, had this post put into the Good Samaritan Handyman category on TikTok. If you upload the videos from this category, you will see a variety of hashtags, but some of the hashtags include relgious themes such as #christian. McDonald’s not only is committed to its digital marketing channels, but also continues to find ways to compete with customers in the U.S. markets. Chick-fil-A, eat your heart out!
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