McDonald’s CEO Steve Easterbrook lost his job over relationship with employee

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McDonald’s Corp fired Chief Executive Officer Steve Easterbrook because he had a consensual relationship with an employee, losing the strategist who revived sales with all-day breakfast and led the company’s charge into delivery and online ordering.

The burger chain’s board voted Friday to terminate Easterbrook, 52, after investigating the relationship, which violated company policy, according to a statement Sunday. McDonald’s policy doesn’t allow the CEO to have a relationship with anyone in the company. Chris Kempczinski, who runs US operations, was promoted to president and CEO.

“This was a mistake,” Easterbrook said of his actions in an email sent to employees Sunday. “Given the values of the company, I agree with the board that it is time for me to move on.”

Easterbrook was seen as relentless in his push to capture a new generation of customers who would be willing to order through smart phone apps, pay online, and choose to have food delivered to home or work instead of venturing into the outlets. To stress urgency, he tied executives’ compensation to the speed and breadth of the delivery rollout, and worked with vendors including UberEats.

His strategies are paying off: Same-store sales, a key metric of success, recovered with the arrival of all-day breakfast, and he axed poorly selling items and added new ones while creating lower priced value menus to draw in diners. McDonald’s shares have almost doubled since he took over in March 2015, more than twice the gain in the S&P 500 Index.

“You can make a very strong argument that Easterbrook was the best CEO in the restaurant industry,” said Michael Halen, who covers the sector for Bloomberg Intelligence. The stock closed at $193.94 a share on Nov. 1, giving it a market capitalization of $147.3 billion.

With Easterbrook now out of the picture, it’s left to Kempczinski to continue the push into delivery and electronic ordering. He joined McDonald’s in 2015 to oversee global strategy, business development and innovation. He most recently served as president of the US business and, like Easterbrook, was deeply involved in the drive to expand online delivery.

“Chris has been an important partner to me over the last four years and is the ideal person to take on the role of CEO,” Easterbrook said in his departure note. Joe Erlinger, who joined the company in 2002, will become president of the US business.

In recent quarters, McDonald’s has been one of the industry’s best performers, with same-store sales rising 5.9% globally in the latest quarter, more than analysts had projected.

The company has sought to renovate its image by remodelling its locations — but franchisees have complained about the high costs associated with changes like building a wall to hide the kitchen operations behind the cash registers. In 2018, it slowed the pace of remodels, letting operators complete them by 2022 instead of the initial goal of 2020.

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