McDonald's Next CEO: Don Thompson, the Man Behind McCafe

McDonald's Names Next CEO: Don Thompson, the Man Behind McCafe A champion of McDonald's (MCD) expanded menu offerings, spruced-up restaurants and global expansion will soon take the top spot at the country's biggest burger chain.

Don Thompson, president and COO of the 33,000-unit fast-food giant, has been named as the next CEO, replacing Jim Skinner, who will retire June 30.

Thompson has been the second highest-ranking executive in the management team that led McDonald's through nearly a decade of sales growth. As COO, he was instrumental in the roll-out of specialty coffee drinks at the chain. In the CEO's office, he will focus on further enhancing McDonald's menu and customer experience, and continue to extend its international reach, he said in a statement.

Thompson joined the company in 1990 as an electrical engineer, and moved up the corporate ranks in business and global systems management positions.

His appointment, effective July 1, is also socially significant: He'll be the first African American CEO in McDonald's 72-year history.

Analysts were upbeat on the news, and expect Thompson to build on Skinner's successful strategy.

"We believe this transition will be seamless, as Thompson has been a strong advocate of McDonald's and Skinner's 'Plan to Win' strategy, which prioritized menu innovation and modernized locations," says Morningstar analyst R.J. Hottovy, in a research note.

Over the last few years, McDonald's has boosted sales and expanded its appeal with consumers by adding specialty beverages, breakfast offerings such as cereal, and snack items like wraps, as well as limited-time-only items such as the cult-favorite McRib barbeque pork sandwich, Bob Goldin, executive vice president of Technomic, a food-service consulting firm, tells DailyFinance.

McCafe, McDonald's highly successful foray into specialty beverages -- from lattes and cappuccinos to smoothies and now frozen slushies -- "was Thompson's baby," Steven West, an analyst with ITG Investment Research, tells DailyFinance.

When McDonald's rolled out McCafe in 2007, management projected the concept would add roughly $125,000 in annual sales to each store. McCafe ended up "blowing away all of their wildest internal qualifications," West says.

"Now all the restaurants -- Subway, Burger King, Taco Bell" -- are angling for a piece of the specialty-beverage business, he says.

At the same time, the fast food chain, which just a few years ago was regularly targeted for its contributory role in the country's obesity epidemic, has rehabilitated its image. "They were considered nutritionally irresponsible," Goldin says. "You never hear that anymore."

The chain has shed that label -- somewhat -- with "symbolic" gestures such as adding apple slices to the kids' meals, he says.

Though McDonald's has outperformed burger-joint rivals Wendy's (WEN) and Burger King, Subway's has become "probably it's biggest day-to-day competitor," Goldin says. "That's one chain that continues to grow in the convenience quick-service area."



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Millionaires

Congratulations to Mr. Thompson on his (historic) appointment. It would be great if McDonald's can continue to embark on a path of introducing a healthier menu and to see that its franchise stores in certain locations clean up their act. I could elaborate on this but I believe that most people understand. In certain McDonald's, especially as I've noted in the Washington, D.C. metropolitan area, the workers are often inefficient and sometimes unprofessional and rude. Note, that certainly doesn't apply to all, just some. If individual store owners cared more about customer service and good management, rather than just hiring "bodies", perhaps this problem wouldn't exist, or at the very least, be much less prevelant than it is. If these poorly operated chains want to know what friendly, efficient customer-service driven restaurants look like, they only need to visit a Chick-Fil-A.

March 22 2012 at 8:05 PM Report abuse rate up rate down Reply
Roy Lawson

Good choice. Looking at his picture, he's no stranger to the Big Mac.

March 22 2012 at 6:38 PM Report abuse rate up rate down Reply