Steve Easterbrook and the challenges at McDonald’s

Brothers Dick and Mac McDonald first opened their Bar-B-Q restaurant in California’s San Bernardino in 1940 with a long and extensive menu. Eight years later, it briefly closed before re-opening as the McDonald’s we all know. It had a much shorter menu that focused on hamburgers, cheeseburgers, soft drinks and fries. The 15cent hamburger led the menu as they expanded across the US, and within a decade they’d sold their 100 millionth hamburger.

When the Golden Arches first hit the UK, setting up in London’s Woolwich 40 years ago last October, it changed the way Britain eats. McDonald’s was a novelty; it was exotic, a taste of American cool that was accessible to all.

Not so today. In its place, the likes of Five Guys, which now boasts over 1,000 outlets with 1,500 more in development, and Shake Shack, which underwent an IPO yesterday and achieved a valuation of US$745m, are the exciting new burger joints for a younger generation of consumers. Though it easily remains the biggest, with over 36,000 sites serving 69 million customers every day, sales are in decline at McDonald’s. In last week’s annual results it acknowledged that guest traffic had fallen in all major segments during 2014. Ahead of official figures released later today, US GDP is estimated to have grown 3.2% in 2014, and yet operating income fell by 15% in the final quarter in McDonald’s home market .

McDonald’s is far from alone in this position. From luxury Western brands facing waning interest in China to Procter & Gamble, which is taking steps to dramatically reduce its brand portfolio, some of the world’s biggest brands are no longer guaranteed the status they’ve enjoyed in the past. The closest parallel is perhaps Coca-Cola, whose sales have fallen alongside those of McDonald’s, as both brands are shunned by American consumers.

As it enters a new chapter, the Illinois firm has turned to a Brit, Steve Easterbrook, to turn its fortunes around. He has form, having done just that at McDonald’s in the UK a decade ago. It worked at the time and the UK remains a bright spot today.

Steve is a very well rounded appointment; no one can doubt his credentials as part of the McFamily, but he also brings valuable outside experience from Pizza Express and Wagamama. There is also no question that he is first and foremost a brand guru; but at university he studied Natural Sciences and when he graduated he first trained as an accountant at PwC.


Open and transparent, one of Steve’s greatest assets is his ability to confront challenges head on. During his time at the helm of the UK division he was unafraid to go up against the Super Size Me movement, he stood up for McJobs and overhauled the provenance of McDonald’s products, introducing organic milk and free-range eggs, and basing the supply chain firmly in Britain.

Once again, Steve faces challenges on many fronts, from weaker demand in core markets and increased competition to supply issues limiting the availability of fries in Japan. But perhaps the biggest opportunity is close to home: just as Dick and Mac McDonald did in 1948, there are signs that Steve will need to refocus on what it does best. By addressing current pricing issues and a menu that has grown too long again, McDonalds can return to its roots as a cost-effective, family-friendly outlet.

What else do you think established American brands can learn from the UK market? Email me at and have a fantastic weekend!