McDonald’s Fires C.E.O. Steve Easterbrook After Relationship With Employee

This reminds me of the plot line of Apple’s new The Morning Show series a little bit.

There’s some pretty punchy quotes in this story -

Tanya Harrell, a McDonald’s worker in New Orleans who has helped lead the campaign for a $15 minimum wage, said workers had filed dozens of complaints with McDonald’s demanding that the company take action to address sexual harassment. McDonald’s has ignored the demands, Ms. Harrell said, including requests to sit down with workers to discuss the issue.

“With the firing of Steve Easterbrook, we now know why,” she said. “It’s clear McDonald’s culture is rotten from top to bottom. McDonald’s needs to sit down with worker-survivors and put them at the center of any solution.”

It’s 2019 and the time of the “me too” movement so this was very predictable. This won’t be good for McDonalds shareholders in the short term but I think it’s good to see consequences for this type of behaviour and it’ll increase board’s focus on making sure this sort of thing doesn’t keep happening because of the impact on the company.

Edit

This won’t go down well either, especially in the current political climate -

While the shares have fallen and a few analysts have moves from a buy recommendation to neutral or hold, on the whole it is seen as a buying opportunity even with an unproven CEO coming in.

Credit Suisse: “We view any material pullback in the stock around the CEO change as a buying opportunity.”

Piper Jaffray: “Changes of this magnitude tend to be disruptive.”

Cowen: “We expect Steve Easterbrook’s departure to weigh on MCD shares.”

UBS: “Today’s news likely adds uncertainty to investors’ list of concerns.”

BTIG: “We still believe the turnaround efforts can continue largely unimpeded.”

Looking at our rankings for the 1st of Nov versus this morning, MCD has always had a very strong quality rating, however the momentum and value were both very poor/low and poor respectively. However with the reduction in share price their value is much more of a medium rank now. Overall this has pushed MCD up in our system, with the better value score being the primary driver.

The very low momentum won’t be helped by this disruption but as the new strategy becomes clear, or is confirmed, I expect the analysts will shift around again.

2 Likes