McDonald's Man in the Gray Flannel Suit
WHY YOU SHOULD CARE
As CEO of the world’s largest restaurant chain, Thompson holds sway over everything from the definition of “sustainability” to commodity prices — and, of course, how we eat.
Pooja Bhatia is an OZY editor and writer. She has written for The Wall Street Journal, The New York Times and the Economist, and was once the mango-eating champion of Port-au-Prince.
When Don Thompson became the CEO of McDonald’s in mid-2012, the hoopla was justified. Only a handful of African Americans make it to the C-suites of Fortune 500 companies, and Thompson’s isn’t just any company. McDonald’s is an American icon, a marketplace behemoth and the arbiter of billions and billions of palates around the world.
A win for African Americans? Certainly there’s no underestimating the significance of his rise, and what a small club Thompson has joined. At last count, there were just eight African-American Fortune 500 CEOs, according to the Executive Leadership Council. They include Kenneth Chenault of American Express, Ursula Burns at Xerox and Merck’s Kenneth Frazier.
But not everyone is lovin’ it.
The 18 months since Thompson took the McDonald’s helm have likely strained his gap-toothed grin. Mounting pressure for healthier offerings have led McDonald’s to play up the fruits and veggies (“blueberry pomegranate smoothie” might be Thompson’s favorite talking point) at the cost of service times and price points, but not enough to satisfy the public healtherati. Ever-hungry shareholders want the company to stick to cheap, quick and not-necessarily healthy. Meanwhile the company has become a touchstone in the minimum wage debate, and not to corporate advantage. Analysts say the pressure is on Thompson, with shareholders likely to scrutinize management this year.
McDonald’s performed extraordinarily well during the recession, but since Thompson took over, same-store sales have mostly stagnated as the chain experimented with new menu items (some of them flops) and invested in healthier options. Its stock price has risen gradually if steadily, though, and Mickey Dee’s reliably pays its rather hefty dividend. The company will report fourth-quarter earnings on January 23.
Yet in no time in recent history have the interests of McDonald’s shareholders and stakeholders seemed so opposed. At his first annual shareholders meeting as CEO, in May 2013, Thompson was accused of predatory marketing to African Americans, endangering the health of children of color and generally abetting a public health disaster. One young black woman capped her accusation about black celebrity campaigns with a challenge: “CEO Thompson, I must ask when is McDonald’s going to end its aggressive marketing to communities of color?”
When Thompson turned 50 last year, he had spent almost half his life in McDonald’s halogen-lit halls.
“That was kind of close to home,” replied Thompson, a chink in the armor of his cheerfulness exposed. He grew up in the “neighborhood,” he said, and after 23 years at McDonald’s, “I know we wouldn’t do that, and we don’t do that and we won’t do that under my leadership.”
While African Americans might debate whether Thompson is good for the community, and shareholders whether he’s good for the portfolios, what seems clear is that Thompson is a company man, through and through. When he turned 50 last year, he had spent almost half his life in McDonald’s halogen-lit halls. He claims to eat McDonald’s food every day (insisting he lost 20 pounds doing so last year), and his face lights up at the mention of a Big Mac. He can assemble burgers and dunk fry baskets and tends to do things like pick up a mop when he visits a store. Invited to write an op-ed for the local paper, he spent half of it talking up his corporation’s continuing education opportunities for employees.
Thompson grants few interviews — a company spokesperson declined to make him or McDonald’s board members available to OZY— and McDonald’s seems to carefully control his image: Thompson is an African American success story, from Cabrini Green to the corporate suite.
“We are very proud of what Don has accomplished, being the CEO of a global enterprise, and also salute McDonald’s for having the strategic insight to bring on such a talented individual that they’ve been grooming for more than 20 years,” says Ronald Parker, president and CEO of the Executive Leadership Council, which aims to increase the number of African Americans in corporate leadership positions.
McDonald’s seems to carefully control his image: Thompson is an African American success story, from Cabrini Green to the corporate suite.
Thompson grew up first near Chicago’s Cabrini Green neighborhood and then, when his grandmother decided the neighborhood was too rough, in Indianapolis. (He credits his grandmother for her devotion to his education.) He got his electrical engineering degree from Purdue University, which had recruited him for a minority-engineering program, and met his wife, Liz, there, in the fall of their freshman year. They married several years after graduation, and Thompson took an engineering job with a defense contractor.
His first encounter with McDonald’s Corp. ended in misunderstanding, according to Black Enterprise magazine. A recruiter phoned and Thompson assumed he was being recruited for a position at McDonnell Douglas. When Thompson asked whether he should fly to the aerospace firm’s St. Louis headquarters for an interview, the recruiter replied, “This is McDonald’s hamburger.” Thompson’s response: “You got the wrong guy, because I’m not flipping hamburgers for anybody.”
McDonald’s didn’t want him to flip burgers, of course, and eventually won him over to its engineering division. A few years later, Thompson switched into operations, where he was taken under the wing of a gruff regional manager named Raymond Mines, then the company’s highest-ranking African American. In the ensuing years, Thompson worked in San Diego, Denver and Illinois, uprooting his family when McDonald’s deemed necessary, and made his way through the ranks. He landed a corner office on the executive floor in 2006 and took on the roles of president and COO in 2010, widely regarded as warm-ups for CEO.
You got the wrong guy, because I’m not flipping hamburgers for anybody, said the future CEO.
— Don Thompson
Thompson is not a polished speaker, but he has charisma: He seems approachable, down-to-earth and fun. “He exudes an aura of authenticity, so what you see is what you get,” says Parker. “When people meet Don, they’re almost pleasantly surprised at how approachable and down-to-earth he is,” says McDonald’s spokesperson Heidi Barker.
Thompson’s devout, a vocal Christian who on Sundays drives 25 miles from his family’s house in Burr Ridge to the Apostolic Church in Woodlawn. He donated, big time, to the presidential campaign of another powerful black Chicagoan (Obama, in turn, sent Thompson cuff links when he was promoted to president of McDonald’s). The Thompsons also donate to the food depository and the Chicago Community Trust, and though he recently bought adjacent apartments in Chicago’s Trump Tower, he seems to have a humble attitude toward his lucre: “The money we have is not ours anyway … It’s a blessing.” He is a hugger and smiler and a joker too.
But amiability goes only so far to shield the titan people love to hate and hate to love. During an interview with Bloomberg TV last year, Thompson was asked about its McResource financial planning site for employees, which seemed to suggest that workers would need a second job and could purchase health insurance for $20 a month. (It also urged employees to break food into small pieces to make it last longer, stop complaining and limit their intake of fast food.)
Defending the site, Thompson said, “When I was at a much younger age, I really didn’t know anything about financial planning or management. It really took my wife to help me figure it out.”
“I find that hard to believe,” said the interviewer, giggling.
There’s a similar obliviousness, possibly feigned, at work in his denials that McDonald’s targets African Americans. According to Nielsen, McDonald’s spent some $38 million advertising in African-American media in 2012, making it the third-largest spender.
Fast-food blockbusters tend to be gutbusters, like Doritos Locos Tacos — not, uh, leafy greens.
“McDonald’s under Don Thompson continues to aggressively target communities of color, particularly black communities,” says Sara Deon, a lawyer at Corporate Accountability International. Tactics include using black celebrities and sports icons, hip-hop competitions and special websites targeted to African Americans.
“While we respect their right to voice their opinions, we know we’re a responsible marketer,” says McDonald’s Barker. She points out that the corporation has made a number of moves to expand healthy choices on its menu, like fruit and milk in Happy Meals.
Getting healthier hasn’t been easy. Fast-food blockbusters tend to be gutbusters, like Doritos Locos Tacos — not, uh, leafy greens. (Thompson has said salads constitute just 2 to 3 percent of its sales.) When, in November 2012, McDonald’s reported the first drop in same-store monthly sales in nine years, some suggested that the Golden Arches had “lost a little bit of their shine.” By the end of 2013, a prominent trade pub was wondering, ”What’s Going On at McDonald’s?”
Still — and though some shareholders might get antsy — it’s far too early to judge Thompson’s performance. Sales growth may be lackluster, but that’s partly compared to a previous decade of stunning growth. Moreover, McDonald’s shareholders, like its customers, tend to want short-term gratification. But the corporation takes a longer view, as suggested by the way it grooms execs like Thompson. With his humble origins, easy manner and fierce devotion to McDonald’s, Company Man Thompson may yet be the person who makes fast food relevant, and healthy, for a new generation.