OAK BROOK, Ill. -- As Americans celebrated the birth of their nation this week, one of America's most iconic brands got a new leader. Don Thompson took over the helm of McDonald's Corp., succeeding CEO Jim Skinner and continuing his 22-year career with the burger behemoth.
Analysts have been quick to speculate on what will be Thompson's top priorities as he faces slowing sales, tighter competition and ever-changing consumer demands.
While McDonald's same-store sales are still growing, the pace has declined in the past two months. Sales growth at restaurants open at least a year slowed to a 3.3% increase globally in the past two months from 5% to 7.5% gain in the previous 10 months. U.S. stores saw 3% to 4% growth from a previous 4% to 11% gain.
"Sales and profitability numbers are coming down, so what's going to get McDonald's growing again?" Morningstar analyst R.J. Hottovy told The Chicago Sun-Times.
Part of this comes from increased competition from Nos. 2 and 3 players Wendy's and Burger King, as well as growing fast-casual chains such as Five Guys and Smashburger.
To boost sales, Hottovy thinks Thompson will try to repeat his success in choosing menu items from other parts of the world to bring to the U.S. market. His history with the chain (most recently, he was president and COO since January 2010) includes bringing Chicken McBites into U.S. stores from Australia and Europe and leading the rollout of McCafes stateside.
Among recent additions is the Clubhouse Angus, a one-third-pound burger with hickory-smoked bacon, white Cheddar and American cheeses, grilled onions, steak sauce and Dijon mustard on an artisan roll.
Chicken is also expected to play a big role in future menu expansions for its easy price point and positive health perception among consumers. Bone-in chicken wings and cashew teriyaki salad with chicken are among the items in McDonald's R&D arsenal that could appear in stores, reported Bloomberg.
"Some great examples include our large wrap in Europe and snack items like Chicken McBites," Thompson said at a May consumer conference. "Our customers have given us permission to stretch our brand, so we are entering new categories with new products."
Last week, McDonald's began selling 410-calorie Spicy Chicken McBites in the United States.
Of course, rolling out exciting new items "can be a core strength, but it can also be a detriment if you get to be too broad with your menu," Darren Tristano, executive vice president at Chicago-based researcher Technomic Inc., told Bloomberg.
Meanwhile, McDonald's presence in China could be Thompson's real legacy--if he can out-seat Yum! Brands in store counts, Hottovy told the Sun-Times.
McDonald's has 1,500 restaurants in China, compared to Yum Brands' combined 4,700 sites of KFC and Pizza Hut.
"China is such a potentially lucrative consumer market," Hottovy said. "I think [Thompson] has to narrow the gap to make his mark."
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