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McDonald's Restructuring Plan Focuses Less on Millennials, More on Franchises

The restructuring plan could save the chain $300 million annually.

Spencer Platt/Getty Images

Today, McDonald's announced a large restructuring program which it hopes will improve its financial outlook. In a cumbersome 23 minute video filled with business babble, CEO Steve Easterbrook tried to spell out McDonald's plans to make the company's structure, well, less cumbersome. Easterbrook admitted that the chain's performance has left much to be desired: "No business or brand has the divine right to succeed... Our recent performance has been poor. The numbers don't lie."

There will be "less sweeping talk of millennials."

The restaurant announced the first part of its plan when it dropped a disappointing first quarter earnings report last month. McDonald's plans to close 220 restaurants in the U.S. and China, and another 130 in Japan. In today's announcement, Easterbrook adds that McDonald's will focus more on listening to what customers want, and that in the future there will be "less sweeping talk of millennials." (Does this mean customers will no longer be able to pay for burgers with selfies?) Instead, McDonald's is going to work to improve the perception about the quality of its food through items like that new artisan chicken sandwich that nobody believes is artisan. And, following in Chipotle's footsteps, the chain is now partners with delivery company Postmates, and will offer McDonald's for delivery throughout New York City, starting today.

A major part of the restricting plan also includes franchising more restaurants. Over the next four years, McDonald's plans to have 90 percent of its restaurants from around the world franchised. This is up from the 81 percent of its restaurants that currently fall into the franchise category. This means the chain will sell off nearly 3,500 company-owned stores to franchisees. The Star Tribune notes that the chain soon "will rely more heavily on franchising fees than sales from running restaurants."

The chain also plans to reorganize how its business is segmented. Instead of being divided by geography, as it previously was, the business will now be separated into four categories based on performance. McDonald's hopes these organizational changes will save it $300 million annually. Reception to the restructuring news hasn't been great so far: Shortly after the announcement, the chain's stock price dropped, and remains down about 1 percent.

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