mcdonald’s investor relations plan
TRANSCRIPT
McDonald’s Investor
Relations Plan
Presented by: Lauren Cooper, Xiaoting Chen, Nikita
Sidana and Wenqing Yin
About McDonald’s
Founded in 1955
Serving around 68 million customers
daily in 119 countries across 35,000
outlets
NYSE: MCD
Stock Price: 116.63
Six on Forbes World’s Most Valuable
Brands List
Executive Team
Don ThompsonEx President and Chief
Executive Officer
Steve EasterbrookPresident and Chief
Executive Officer
Kevin OzanExecutive Vice President
and Chief Financial Officer
Chris StentVice President of Investor
Relations
SWOT Analysis
Strengths
● Strong brand equity
● Global brand
● Stable cash flow
● Consistent food
● Iconic logo and food
● New management
● Increasing wages and benefits for all company-
operated restaurant employees
● Successful advertisement and brand name
● Adding greater value through innovation
● Leading on all social media platforms
Opportunities
● Upgrading menu and product lines
● Dominating overseas
● There is a McDonald’s in 119 countries in the world
● Expanding globally
● Corporate social responsibility activities
● Participating in climate pledge
● Taking initiative for a healthier generation
● Animal health and welfare
● Charities
● Saving energy
Weaknesses
● Negative publicity
● Declining market share
● Declining revenues
● High employee turnover
● Low quality of food
● Weak product development
Threats
● Competition
● Health conscious consumers
● Changing demographics
● Fluctuating exchange rates and currency
headwinds.
● Threat from local competitors in different countries
Issues in the Last 2 Years
Issues in the Last 2 Years
Quality and safety of products
Health conscious consumers
Increased competition
Stagnant Sales
Demand for higher minimum wage
Slow service
Too many menu items
Turnaround Plan
More franchises
From 81% to about 90% by the end of 2018.
A new structure
Streamlined teams with fewer layers and less bureaucracy
Better organized markets
Delivery in New York City
More digital
Concentrate on increased data and analytics
Situational AnalysisFinancial Performance
McDonald’s sales have declined in the last two years in both the U.S and global market.
In Q3 2015, McDonald’s shows its first sign of turnaround with its strong Q3 earnings.
Situational Analysis
Stock Price● McDonald’s stock price was stagnated for 2 years, falling 7% from April 2013
to September 2015.
● And the stock has jumped 17% since late September, to $116.63 now.
Situational AnalysisDividend and Cash Flow
A quarterly cash dividend of $0.89 per share
for Q4 2015, equivalent to $3.56 annually.
Good dividend history: 3.1% yield
Ample cash flow: In Q3 of 2015, McDonald’s
returned $3.1 billion to shareholders.
Situational Analysis
Stock Ownership
Institutional ownership is up from 64.7% to 69.9% since the beginning of 2015.
Proxy Access
Competitive Analysis
McDonald’s (MCD) $112.12
Yum Brands (YUM) $67.10
Chipotle Mexican Grill (CMG) $614.13
Wendy’s (WEN) $10.64
Typically a McDonald’s restaurant brings in $2.6
million in sales whereas a Burger King restaurant
brings in approximately $1.2 million
Shake Shack’s stock price has almost tripled since its
IPO in January this year
McDonald’s continues to generate a large amount of
revenue and is holding to 30% margins
Shake Shack and Chipotle are more modern and use
social media strategies to attract the masses
Board of Directors
21% Women 79% Men
Median age is 62 (youngest is 48, eldest is 86)
Long tenure of approx. 12 years
Backgrounds include: asset managers, healthcare,
private equity firms, tech giants (Google), athletic
footwear (Nike), and Target
Strong understanding of business
Trouble connecting with emerging demographics
Lacks clear picture of independence
Annual Shareholder Meeting
May 21, 2015 in Oakbrook, Illinois
Annual Shareholder Meeting
“...We are solely inviting media to listen to the meeting via webcast...”
Lisa McComb
Director of Media Relations at McDonald’s
May 19, 2015
--
"They are control freaks. They are trying to control the message by keeping [the press] out."
-- Richard Adams
Former Corporate Officer
"McDonald's board needs to be more accountable for these performance lapses."
-- Cambria Allen, Corporate Governance DirectorThe UAW Retiree Medical
Benefits Trust
Annual Shareholder Meeting
Annual Investor Meeting
“Make your actions match your public messages!”
Earnings Conference Call
McDonald’s:
October 22, 2015 After the Q3 2015 Results Reported
Steve Easterbrook
CEO & PresidentKevin Ozan
CFO
Chris Stent
Vice President & Investor Relations
Analysts:
Earnings Conference Call
They are shaping perceptions.We’ve made meaningful progress to fuel our turnarounds.
We reposition McDonald’s as a Modern Progressive burger company.
We commit to great tasting, high quality food, convenience and value of McDonald’s.
We must be Customer Centric in our planning and our decision-making.
Our goal is net simplification.
Howard Penney -- Hedgeye
Steve, you used the phrase net simplification a couple of times I think in your prepared
remarks.
But What does net simplification mean? Can you explain that term?
Earnings Conference Call
They are trying to control messages by keeping certain topics out:
● Prevent from misinterpreting and wrong reads on early-stage initiatives
“I really don’t want to give too much guidance here, Karen, not to be evasive, but just
when you are a first couple of weeks in and we have got a lot of media behind it I don’t
want to give a wrong read.”
-- Steve Easterbrook
Pre-Setup Agenda for Investor Meeting
With aggressive tone and keep saying “We are making progress”
Earnings Conference Call
“So I am a fairly resilient guy. I won’t
get worn down by the same question
kind of asked different direction. But I
appreciate the interest.”
-- Steve Easterbrook
President & CEO
Annual Investor Meeting
November 10, 2015
McDonald’s:
Steve Easterbrook
CEO & President
Peter Bensen
Chief Administrative
Officer
Chris Stent
Vice President & Investor Relations
Kevin Ozan
CFO
Presidents of different segment markets: U.S., International Lead Markets,
High-growth Markets, Foundational Markets
Annual Investor Meeting
Annual Investor Meeting
“These were Not radical announcements.”
--
Aristofanis Papadatos
"Everything we said we'd do in May,
we've done, and now we're going
further," Easterbrook said.
Annual Investor Meeting
CEO Performance
● A fierce defender of the brand
● Helped turn around the U.K. business
● His sights are on the Millennial Generation
Steve Easterbrook, Chief Executive, McDonald’s UK
TV Debate with Eric Schlosser, an industry critic and the author of “Fast Food Nation”.
CEO Performance
McDonald’s declined to make Easterbrook available for
interviews.
Steve Easterbrook
CEO & President
An inappropriate video statement about the global
turnaround plan:
Too long, CEO cliche, No stories, Lack of motion, No
visual varieties, Stupid slidesBanned media from the annual shareholder meeting.
“So I am a fairly resilient guy. I won’t get worn
down by the same question kind of asked
different direction. But I appreciate the interest.”
Media Sentiment
Investor Relations Website
Regulatory Filings & News Releases
SEC filings from 1994 to 2015
Two categories: corporate news and financial news (2010)
13 financial and 15 corporate news releases this year
Inconsistent, contain errors and fluffy quotes
Yum Brands
Easily accessible and can be sorted by year
CSR - 2020
Corporate social responsibility and sustainability
framework:
Serve 100 percent more fruit, vegetables, low-fat dairy or
whole grains and reduce salt, and sugar
Partnered with the Alliance for a Healthier Generation
Increase in-restaurant recycling to 50 percent and minimize
waste
Create opportunities for their employees
Ronald McDonald House Charities has served 5.7 million
children and their families
IR Plan
Goal:Improve the Investor Relations Department to Leverage Communication Strengths.
Strategies:1. Ensure McDonald’s turnaround plan is well understood by the investor community,
which will lead to a fair valuation of the stock and ensure investors’ confidence in the
company.
2. Restore the public image of McDonald’s and improve positive public perception on
McDonald’s food quality and safety.
3. Establish a stronger relationship with shareholders, media and analysts to earn
positive feedback and expectations.
Leverage CEO & Executives Image
Goal: Ensure Investors’ understanding and confidence about the
turnaround plan as it proceeds in future.
Measurement:
● One-on-one calling and face-to-face meetings
● We will analyze quotes from the investors and the analysts.
“Make your actions match your public messages!”
Leverage CEO Image
Arrange personal meetings with investors to
establish stronger relationships
Listen
Customized key messages
Media coaching programs
Framing messages with rationales and strong
tone
Reframe the conference call scripts:
No business jargons
More clarifications on decision-making processSteve Easterbrook
CEO & President
Shareholder Letters
Goal:Regain brand trusts
Rally advocacy groups as supporters of CSR programs
Brand ambassadors
Plan:Immediately sent to the shareholders to inform latest CSR programs.
Develop a new Letter to Shareholders for the upcoming year
Measurement:Analyzing quotes from advocacy groups and shareholder activists
Promote Positive Presence & Strengths
Send Monthly Investor Newsletters
Provide updates on company’s turnaround plan & business initiatives
Welcome feedback from investors
● Communicate Company Strengths
○ Consistently increasing dividend
○ Initiatives to respond to changing consumers
Measurement: Increase media coverage by 50% due to favorable prospects
from the turnaround plan
Promote Positive Presence & Strengths
Yearly Roadshow
Deliver company strengths and value
Connect with current and potential investors
Industry Convention and Trade Show
Cattle Industry Convention & NCBA Trade Show
Deliver Commitment to food safety and defining sustainable beef
Potential Investment
Measurement: 40% of positive press coverage on McDonald’s active
presence in the roadshow and industry convention
Website Design/Filings
● Redesign Website to increase views and engagement by 40 to 60%○ Hire external web design team
○ Interactive
○ Consistent
○ Modern
○ Updated
● Double news and financial releases○ Provide training/workshops to team
○ Consistent format and increased readability
○ Key information highlighted
○ Increase stories on CSR initiatives by 20%
Media Relations
Improve media relations and increase positive stories by 50% from the
previous year
○ Updated content with effective messaging
○ Media roundtable
○ Increase Easterbrook’s interviews with media by 20%
@McDonaldsIR
@McDonaldsIR will host the company’s IR information
More content, faster delivery and broader reach
Communicate with current and future analysts, media, investors,
employees, customers and other stakeholders
Modern way to connect with younger demographics
Way of the future
Measurement Tools:
Social Mention, Simply Measured and Sysomos
Who, What, Where, When and How information is being
accessed
Measurement Goal:
Increase social media following on all accounts by 10%
Increase positive sentiment across all accounts by 5%
Revise Board of Directors
Evolving customer group requires revised BOD
Cannot connect with two main demographics:
millennials and young families
Not objective - too close to management
Not a lot of independent members
Require younger voices
Goal:
See change amongst BOD
Measurement:
If change occurs amongst BOD then we will
know that we have achieved success
Budget
Activity Cost
Research and analysis $10,000
Training and workshop
for existing team
$15,000
Website design team
and costs
$5,000
Media training $6,000
Social media initiatives $3,000
Press releases ($150
each)
$10,000
Media roundtable $5,000
Media relations
initiatives
$5,000
Relationship building
activities with analysts
$10,000
Relationship building
activities with outside
vendors and
consultants
$10,000
Quarterly Earnings,
Annual Report
$40,000
Annual Meeting $20,000
Earnings Conference
Calls
$15,000
Shareholder Relations $20,000
Improved Letters to
Shareholders & monthly
newsletters
$10,000
Administrative $30,000
Investor Relations Kit $15,000
Travel Expenses $100,000
NIRI Dues $500
Total expenses $329,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Earnings Releases
Launch Media Training
Conference Call
Media Roundtable
Website Redesign
Launch Twitter Handle
Sales Releases
Road Show
Investor Meeting
Newsletters
Annual Shareholder
Meeting
Conferences
Shareholder Letters
Timeline
Thank You