DES MOINES, Iowa -(Dow Jones)- Seeking to assuage "feelings of uncertainty" within what he called the "McFamily," McDonald's Corp.'s (MCD) chairman and chief executive proclaimed his "absolute resolve, determination and confidence" in the fast-food giant's success.
In a message which follows unconfirmed rumors of a failed palace coup in McDonald's boardroom, CEO Jack M. Greenberg also wrote, "I want to assure you, this management team has the full support of the board of directors." McDonald's has termed those rumors - which circulated on Wall Street as well as among McDonald's employees, franchisees and suppliers in recent weeks - "wild speculation."
Even before the rumored incident Wall Street had been growing impatient with McDonald's performance. In a report last November, Lehman Brothers' Mitchell Speiser called 2002 a "critical year for McDonald's to demonstrate that margins can stabilize, customer satisfaction scores can significantly improve and expectations can be met, regardless of the macro-environment. "Now is the time to deliver," Speiser wrote. Most of Greenberg's message, sent electronically to franchisees on Wednesday, seemed aimed at rallying them after what the CEO has called a "difficult year" for the company.
It was a year in which McDonald's posted its fifth straight quarterly earnings decline, several key overseas markets stumbled and its biggest institutional stakeholder, Fidelity Investments, sold more than a third of its McDonald's stock. Greenberg, who has seen McDonald's shares lose value since he assumed the corporate helm in 1998, said he is "optimistic about our future. But it will require our commitment to do what it takes to win." He acknowledged concern within McDonald's about the state of its business. "As I talk to people around the system, I can sense some feelings of uncertainty," he said, adding, "Given all the changes we are going through... it is not surprising.
Calling such attitudes "unhealthy for McDonald's" and "not conducive to success," Greenberg said this is a time for those in McDonald's to "stand tall and stand together as we build a bright future."
Franchisees Urged To Ignore 'Naysayers'
Greenberg's message referred several times to the upcoming biennial franchisees' worldwide convention in Las Vegas next month. He asked that attendees share their successes and concerns with him "before the convention so we can address them during our meeting."
He also urged franchisees to ignore "naysayers and cynics who want to tear this system apart." Apparently addressing owner/operators worried about the value of their businesses in an in intensely competitive market, he said, "Those who believe that you can protect your net worth by raising prices aggressively, ignoring new products or other innovations, or standing still while our customers demand more and our competitors improve, do not understand our business."
In a Feb. 22 newsletter, Dick Adams, a San Diego franchise consultant who deals primarily with McDonald's operators, advised franchisees to minimize existing debt, set menu prices to maximize profitability and keep new products and equipment to a minimum.
The consultant, a former McDonald's manager and franchisee, contended that company policies are making it increasingly difficult for franchisees to build equity in their business.
In his message, Greenberg argued that "each of us has an obligation to combat this negativity and criticism by letting our results and the way we deal with each other prove the critics wrong. . . . Let's not let McDonald's beat McDonald's."
Asked for comment, company spokeswoman Anna Rozenich said Friday: "The letter speaks for itself. It is a statement of our chairman's faith in our system around the world. We are not going to discuss our internal correspondence beyond that."
Andrew Adams writes for www.magfranchise.org where you can find out more about franchising and other topics. |
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