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McDonald'sto Cut Jobs, Restructure

October 18, 2001|DEBORAH COHEN | REUTERS

CHICAGO — McDonald's Corp. said Wednesday that it will undertake a major restructuring of its U.S. business by consolidating regions and eliminating as many as 700 corporate jobs in an effort to improve service.

The company said it will streamline its U.S. regions to 21 from 37 and cut 500 to 700 field and home office jobs to gain efficiencies. In addition, the company created five senior executive posts on its U.S. management team.

McDonald's said the efforts will focus on supporting its U.S. franchisees. It assigned each region a general manager and a team that includes a vice president of quality, service and cleanliness. The teams also will include operations consultants who will spend more time in restaurants, the company said.

"The operators will get a lot more support where they really need it," company spokesman Walt Riker said. "All of this is going to add up to better business, to better service to the customers."

Bold moves had been expected from the fast-food giant, which has posted three consecutive quarters of profit decline and has struggled with waning consumer demand amid "mad-cow" beef scares in Europe as well as the effect of a strong U.S. dollar on overseas earnings. In the United States, McDonald's has been criticized for declining service levels.

"It looks like they're focusing more on operations, which I definitely think is a plus," Salomon Smith Barney analyst Mark Kalinowski said. "They definitely want to improve the restaurant-level experience."

Shares of McDonald's dropped 30 cents to $29.40 on the New York Stock Exchange.

The company said last week that it would trim its U.S. divisions to three from five, in what Wall Street sees as an effort to shift more authority back to its Oak Brook, Ill., headquarters.

McDonald's, which plans to report third-quarter earnings today, is expected to earn 38 cents to 41 cents a share, with a consensus of 39 cents, according to market research firm Thomson Financial/First Call. A year ago, the company earned 41 cents a share.

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