McDonald's (MCD) new CEO Steve Easterbrook said Wednesday he'll offer initial details early next month of his plan to reverse a decline in the fast-food chain's global sales.
Easterbrook, who took over from Don Thompson on March 1, spoke during an earnings call that came after McDonald's reported quarterly revenue that came in below expectations and adjusted earnings that beat estimates, with its shares rising after the release.
Net income in the quarter ended March 31 fell 33 percent to $811.5 million, or 84 cents a share, down 33 percent from $1.20 billion, or $1.21 a share, a year earlier. Revenue plunged 11 percent to $5.96 billion, driven by weakness in the U.S. and key markets in Europe and Asia. Analysts expected profit of $1.06 on revenue of $6 billion.
McDonald's has stumbled in recent years amid intensifying competition from rivals including Wendy's (WEN) and Yum Brands' (YUM) Taco Bell, with Consumer Reports ranking McDonald's burgers as the worst-tasting among major chains.
The company has already announced a number of changes to counter the view of its food as unhealthy, saying it would curb the use of antibiotics in raising poultry and offer a simplified grilled chicken recipe. In late March, it said it would start testing all-day breakfast at some San Diego outlets this month. The company also plans to debut a new premium sirloin burger, according to media reports.
"The company is struggling - there is no doubt about it," Jack Russo, an analyst with Edward Jones, told CBS MoneyWatch. "There are so many areas where it needs to improve. They need to improve their relations with franchisees which have been beaten up."
Seeking to counter criticism of how it treats employees, McDonald's also said it would hike salaries and grant vacations to workers at company-owned stores. The company also announced plans Wednesday to close 350 locations, mostly in the U.S., Japan and China. That's in addition to the 350 it said it would close in January, according to spokeswoman Becca Hary.
"McDonald's is always closing locations as leases run out, local markets change, etc.," writes franchise consultant Richard Adams in an email. "But they are limited by the fact they have franchised restaurants where McDonald's Corp. has an obligation to franchisees who have an investment. They can't just shutter locations where they have a long-term commitment to the franchisee."
Franchisees have complained that their fees have risen as their profits have fallen. A recent survey of these independent business owners by Janney Capital Markets found their relations with the Oak Brook, Illinois-based company was the worst the firm has seen in the 11 years it has conducted its research.
Easterbrook angered franchisees when he announced plans to raise the wages of 9,000 workers employed at company-owned locations, which represent about 20 percent of its overall locations, according to Adams.
The CEO "stumbled out of the gate by mishandling the pay rate in the company stores and has lost a lot of credibility with franchisees in his first month on the job," he wrote in an email.