Burger flipped

New McDonald's boss has the right ingredients

Steve Easterbrook is the $2.5-billion new man at McDonald's. That's how much shareholders added to the burger chain's value in after-hours trading when the veteran of the Golden Arches was announced as the replacement for current Chief Executive Don Thompson. Easterbrook may well have just the ingredients the struggling fast-food chain needs to adapt to changing consumer tastes and revive sales.

He faces a supersize challenge. The change at the top comes less than a week after McDonald's reported some of its weakest results in years. Revenue at restaurants open for more than a year was down 1 per cent in 2014 - the worst annual showing since 2002. And net income slipped 15 per cent as the company was stung by falling customer traffic and a food safety scandal in Asia. To add to its problems, activist fund Jana Partners reported a stake in the company three months ago.

Tight household budgets and tougher competition from fast-food competitors like Chick-fil-A and Burger King, which has been revitalised under private equity ownership, are partly to blame for the woes at McDonald's. But the bigger problem is more existential: grabbing a Big Mac, fries and a Coke also doesn't resonate with the cool kids like it used to.

A backlash against fatty foods has created an opportunity for so-called fast-casual competitors like Chipotle, a company once owned by McDonald's and whose menu options are perceived as healthier and more authentic. Thompson, a 25-year McDonald's veteran who will retire on March 1 after just over two years in the top job, was unable to turn perceptions round fast enough.

Easterbrook might not look like the best man to lead a turnaround on first blush. He's virtually a lifer, having joined in 1993 in the UK and worked his way up to be head of Europe. And he has spent the past year and a half as global brand manager.

But during that time he has been spearheading efforts to reinvent the McDonald's brand and rejig its menu. And before that he spent two years running more hip UK restaurants: PizzaExpress and then noodle bar Wagamama. It's these kinds of competitors McDonald's needs to learn from.

The board's directors - including its independent chairman - have at least shown that they know where the problems lie. The trick now is to cook up something tasty enough for customers and shareholders to sink their teeth into.