McDonald's to Speed Refranchising, Cut Costs

McDonald's Corp. Chief Executive Steve Easterbrook outlined his strategy to revive the struggling fast-food chain on Monday, unveiling plans to save $300 million a year by accelerating refranchising, restructuring under new segments and cutting down on bureaucracy.

Shares fell about 1.4% in premarket trading.

Mr. Easterbrook, who took the helm on March 1, has set expectations high for his turnaround efforts. He repeatedly describes himself as a change agent dedicated to turning McDonald's into a "modern, progressive burger company," and says he and his team "are challenging some of the conventional thinking on multiple fronts."

Mr. Easterbrook said Monday that his immediate priority is restoring growth under a new organizational structure.

The company will reorganize under four segments--the U.S., international lead markets such as Australia and the U.K., high-growth markets like China, and foundation markets--starting July 1.

"Our new structure will be supported by streamlined teams with fewer layers and less bureaucracy, and our markets will be better organized around their growth drivers," Mr. Easterbrook said in a news release.

In addition, McDonald's now plans to accelerate its pace of refranchising to 3,500 restaurants by the end of 2018.

In all, the moves are expected to save $300 million a year in general and administrative costs, most of which will be realized by the end of 2017.

Mr. Easterbrook had already announced changes prior to Monday's plan. His plans have included raising wages for McDonald's restaurant workers, an effort to curb antibiotic use in its chicken, testing of all-day sales of breakfast items, and the launch of premium chicken sandwiches and sirloin burgers.

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