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Inside the new McDonald's CEO's quest to win over the massive fast-food giant after his predecessor's shocking exit

McDonald's U.S President Chris Kempczinski fresh beef
Chris Kempczinski faced an uphill battle when he was abruptly promoted to CEO of McDonald's.
Richa Naidu/Reuters

Chris Kempczinski faced an uphill battle when he was abruptly promoted to CEO of McDonald's on November 3.

Kempczinski, previously the president of the fast-food giant's US business, has big shoes to fill. His predecessor, Steve Easterbrook, was well-liked and respected at the company, according to McDonald's employees and franchisees. Easterbrook led McDonald's through the national launch of all-day breakfast and fresh-beef quarter pounders and the acquisitions of two tech companies this year.

Easterbrook, however, was abruptly terminated after an investigation into his relationship with an employee. Suddenly, Kempczinski was thrust into the position of CEO, just four years after he joined McDonald's.

Despite his relatively short time at McDonald's, Kempczinski brought significant baggage to his new position. As the head of the company's US business, Kempczinski struggled to get franchisees on board with bold initiatives such as a remodeling program that could cost up to $750,000 a location.

Kempczinski has attacked the challenges related to his abrupt promotion with vigor. He has spent the past two weeks working to get the fast-food giant's massive web of corporate employees, franchisees, and more on board with his vision for the future of the company, according to leaked internal documents and interviews with 10 current and former McDonald's corporate employees and franchisees.

Kempczinski's quest to win over McDonald's has been largely successful, according to these insiders. Presenting a calm and optimistic face after a dramatic shake-up, Kempczinski has laid out a strategic plan in line with Easterbrook's that also emphasizes ethics and values in the face of scandal.

'I'm asking you to reenlist in us to make this company an example for the world'

mcdonalds hq ceo shakeup 4x3
Steve Easterbrook was well-liked at McDonald's before his abrupt departure.
Richard Drew/AP Photo; Samantha Lee/Business Insider

When the news broke of Easterbrook's departure, Kempczinski sprang into action to reassure franchisees and employees. The core of his messaging has been that McDonald's won't change course strategically but that misconduct of any kind will not be allowed under his leadership.

On November 6, the Wednesday following his promotion, Kempczinski and the company's chairman, Rick Hernandez Jr., held a town hall at the company's Chicago headquarters that was streamed to McDonald's employees around the world.

"The mission I'm asking you to reenlist in is to make this company an example for the world and to do the right thing each and every day," Kempczinski told employees, according to a source who attended the town hall.

Kempczinski said McDonald's would continue to work on its Velocity Growth Plan, generally emphasizing to employees that the company's overall strategy would remain unchanged, according to sources. He also shared personal information about himself, including that he had been married for 25 years, met his wife in college when she offered to share her notes, and was the father of two children and owned a goldendoodle.

The new CEO took time to emphasize the importance of values. According to another McDonald's employee, Kempczinski emphasized in the town hall that he would not have anyone on his team who didn't share his values — something the employee saw as a clear jab at Easterbrook's behavior.

Hernandez also alluded to Easterbrook's departure, in discussion of the company's policy around relationships between employees.

"I think basically it tries to keep the workplace about work, an honest and open interaction with people and a place where people can believe that decisions are made or not made for personal reasons, but for professional reasons, for the best interest of the company," Hernandez said of the policy.

On Monday, Kempczinski sent a letter to McDonald's employees thanking them for their efforts, which allowed McDonald's to "seamlessly" move on through change. In the letter, obtained by Business Insider, Kempczinski also asked for feedback on what they wanted to see from him in his new position as CEO. 

"Some of that will come in my upcoming visits and touchpoints where I'll get the chance to hear what's on your mind — but for those I won't get to right away and for those with whom I haven't yet spoken, here's my invitation," Kempczinski said. "Between now and year-end, share something that makes you proud to be part of McDonald's and something I could do as CEO to make you even prouder."

Hernandez and Kempczinski's efforts to get workers on board have paid off, according to three current and former corporate employees. Multiple employees and franchisees said that even though the details of Easterbrook's relationship remained a mystery, they agreed with the board's decision to terminate the CEO.

"I think that folks trust the board," one former corporate employee who left McDonald's earlier this year said. If board members determined Easterbrook's relationship was grounds for termination, the person said, "there must have been something that was driving it."

McDonald's stock has also rebounded after the company lost $4 billion in value immediately after the CEO shake-up. When the market closed on November 1, the Friday before Easterbrook's departure, shares were trading at $193.94. When the market opened on Monday — just over two weeks after Kempczinski's promotion — shares were trading at $194.57.

Winning over franchisees

McDonald's hamburger vs. bacon double quarter pounder
Kempczinski needs to win over franchisees.
Irene Jiang / Business Insider

Because of Kempczinski's history with franchises, some analysts were wary of how his promotion would be received.

"The greatest pushback we expect to Mr. Kempczinski's appointment is weakened relationships with franchisees in 2018 that saw sales soften and traffic turn negative," the Cowen analyst Andrew Charles wrote in a note immediately after Easterbrook's termination.

Leading the McDonald's US business, Kempczinski alienated franchisees by pushing for expensive initiatives, such as remodeling locations and rolling out fresh-beef quarter pounders, that cut into franchisees' profit margins. Backlash swelled to such a degree that franchisees organized the first independent McDonald's franchisee group, the National Owners Association, dedicated to protecting protect franchisees' interests.

"He just put a bad taste in everybody's mouth," one franchisee who sold her locations in 2018 told Business Insider. "He kept talking about the shareholders. It was never about the operators. We were just kind of listening to him talk like, who is this guy and why is he telling me that my business is not important to him?"

But the relationship between McDonald's and franchisees improved over the past year under Kempczinski's leadership. In October, Easterbrook said franchisees' cash flow — or the amount of money they bring in a month — had growth for the prior 11 months through September. Franchisees said Kempczinski began working to collaborate more with franchisees in the face of organized pushback, including adjusting the company's delivery policies and extending deadlines for store remodels.

Improved financials and collaboration helped pave the way for franchisees to respond to Kempczinski's promotion with cautious optimism, as opposed to outright hostility. Kempczinski also sprang into action to fully win over franchisees and smooth over tensions.

Kempczinski reached out to at least one influential franchisee on the evening of November 3, calling National Black McDonald's Operators Association CEO Larry Tripplett, according to the group's documents. By Monday morning, a video starring Kempczinski was sent to franchisee summits around the US, presenting a narrative and financial expectations that helped franchisees get on board with the new CEO.

Tripplett said in the memo on Monday that leadership was "cautiously optimistic in some of the results we are beginning to see." He said Kempczinski called him on Sunday evening and "expressed his plans to continue to work on our cash-flow gaps," or the gap between how much black franchisees and overall franchisees made on average.

Joe Erlinger, who has filled Kempczinski's role as the company's US president, is also playing a crucial role in efforts to win over McDonald's franchisees.

The day of Easterbrook's termination, Erlinger said in an internal memo he would immediately start traveling around the US, beginning with visits to field-office summits in Atlanta, Dallas, and Bethesda, Maryland.

"As part of my transition into the role, I will be traveling around the country visiting restaurants and learning from all of you and your accomplishments," Erlinger said. "You can expect that I will be observing, listening, and asking lots of questions — regrounding myself in our US business."

Unlike Kempczinski, who was seen by many franchisees as an arrogant outsider when he joined the company, Erlinger has worked at McDonald's since 2002. Erlinger is seen as having a better understanding of the McDonald's franchise system, in part thanks to his work with former McDonald's CEO Charlie Bell and understanding of the "three-legged stool," or equally balancing the needs of McDonald's franchisees, suppliers, and employees.

"We are encouraged by the decision to bring Joe Erlinger into the U.S. President position as he is known as a 'system' leader with a deep understanding of the importance of the three-legged stool and mutual collaboration from his tutelage working for Charlie Bell," the National Owners Association, known for its past opposition to Kempczinski's initiatives, said in an internal memo viewed by Business Insider.

The memo continued: "Joe is getting great reviews for his summit presentations, especially knowing he couldn't have been prepared for such developments thus making his comments and approach even more impressive."

Hayley Peterson contributed reporting for this piece.

Are you a McDonald's franchisee or employee with a story to share? Contact this reporter via encrypted messaging app Signal at +1 (646) 768-4740, phone at +1 (646) 768-4740, email at ktaylor@businessinsider.com, or Twitter DM at @Kate_H_Taylor. (PR pitches by email only, please.)

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