Dive Brief:
- Enrique Hernandez will retire as chair of McDonald’s board at the time of the company’s 2024 shareholders meeting after eight years in the role, the company announced Tuesday.
- CEO Chris Kempczinski will take over the role, serving as combined CEO and board chair, while Miles White will step into the lead independent director post, according to the press release. The company is nominating Mike Hsu, chairman and CEO of the Kimberly-Clark Corporation, to serve on the board.
- The move consolidates power in Kempczinski’s hands after he led the company through the COVID-19 pandemic while maintaining its status as the country’s largest QSR brand by sales.
Dive Insight:
Kempczinski’s transition to board chair is likely to take place in late spring, as McDonald’s two most recent annual shareholder days were May 25, 2023 and May 26, 2022.
Hernandez said Kempczinski is well-suited to the responsibilities of a board chair.
“[Kempczinski] is uniquely placed to unify the two roles of CEO and Chairman to ensure McDonald’s advances in lockstep with today’s ever-changing business and social landscape,” Hernandez said in the press release.
Kempczinski, in turn, highlighted Hernandez’s long service on the board.
“Rick has been a tremendous advisor to McDonald’s since joining the Board in 1996, including serving alongside eight McDonald’s CEOs,” Kempczinski said in the press release.
Kempczinski took charge of the company in 2019 when Steve Easterbrook was fired for engaging in a sexual relationship with an employee. Within months, the COVID-19 pandemic cast the restaurant industry into turmoil. In 2020, the chain announced a new growth program, Accelerating the Arches, which it updated in early 2023. The program largely focuses on digital, drive-thru, delivery and development initiatives.
In recent months, under Kempczinski’s leadership, McDonald’s has begun expanding its geofencing Ready on Arrival mobile pickup technology, and is reemphasizing technology. The chain is targeting 50,000 global units by 2027, a target which requires the company to significantly speed up its development. Additionally, the Golden Arches is developing a snacking concept, CosMc’s, to target dayparts and occasions outside of its traditional strongholds.
But Kempczinski’s tenure has seen challenges, too. Recent pricing increases have contributed to a shortfall in traffic among low-income customers. The chain flexed its political and PR muscle in an effort to prevent California’s fast food council from meeting and to prevent the state’s fast food minimum wage from taking effect. The monetary power of the restaurant industry likely played a role in bringing about the $20 minimum wage compromise, but that deal is based on a targeted, sectoral wage, something Kempczinski has opposed publicly.
Simultaneously, increases in the chain’s royalty rates and changes to inspections procedures have angered some of the chain’s franchisees.
