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McDonald's CEO to 'reset' business model amid financial struggles

McDonald's CEO Steve Easterbrook announces a new turnaround plan restructuring international markets to "reset" the company.

By Marilyn Malara
A child tries to get the attention of a Ronald McDonald statue. File photo by Bill Greenblatt/UPI | <a href="/News_Photos/lp/cfa599e8425c36bbc585bb4c14a86090/" target="_blank">License Photo</a>
A child tries to get the attention of a Ronald McDonald statue. File photo by Bill Greenblatt/UPI | License Photo

OAK BROOK, Ill., May 5 (UPI) -- "The reality is, our recent performance has been poor," McDonald's CEO Steve Easterbrook said in a video to shareholders released Monday.

"The numbers don't lie. Which is why, as we celebrate 60 years of McDonald's, I will not shy away from resetting the business."

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In the 23-minute address outlining a new plan to reinvent McDonald's, Easterbrook, 48, divulged his intentions to reorganize international operations and extend franchise opportunities worldwide.

Starting July 1, the framework will center around a new international structure. Instead of divvying the world into traditional regions -- U.S., Europe, Asia-Pacific, Middle East and Africa -- the company will draw new lines segmenting the world into four parts based on their market performance.

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-- The United States: more than 40 percent of operating income in 2014.

-- International Lead Markets: Australia, Canada, France, Germany and the U.K., representing another 40 percent of operating income.

-- High-Growth Markets: China, Italy, Poland, Russia, South Korea, Spain, Switzerland and the Netherlands, representing 10 percent.

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-- Foundational Markets: Around 100 independently-owned markets

Easterbrook was named CEO in January and in a few short months has chosen to lead "a global turnaround" to help McDonald's become a "modern progressive burger company."

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Franchising and re-franchising restaurants is another key element for the company's framework change. Easterbrook hopes 90 percent of restaurants are franchised by 2018, encouraging the company's entrepreneurial spirit.

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Incorporating high-quality ingredients is another of Easterbrook's goals. After facing tough competition from restaurants like Five Guys and Chipotle -- which highlight their use of quality ingredients -- McDonald's entered the low-caliber shadows.

The introduction of sirloin burgers and artisan chicken is meant to show customers McDonald's is making efforts to regain their trust.

Delivery and all-day breakfast are other innovations currently being tested in select locations like New York City as part of the turnaround.

"Progress is bumpy and uneven," Easterbrook said, "but the U.S. is on the right path."

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