McDonald's U.S. CMO Hire Could Help Mend Franchisee Relations

Industry Outsider Deborah Wahl Brings Deep Experience With Franchise Model

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McDonald's decision to recruit an outsider to fill its top U.S. marketing job indicates the chain believes its brand needs some fresh thinking and could give it a clean slate with frustrated franchisees, according to industry executives.

Hiring an outsider as a senior exec is a departure for the Golden Arches. And its latest hire is particularly unusual due to her lack of deep fast food experience.

Deborah Wahl
Deborah Wahl Credit: Carlos Osorio

Deborah Wahl was named senior VP-chief marketing officer for the U.S. on Wednesday -- the first female to hold that position at the company. She has spent the majority of her career at automakers including Ford, Toyota, Lexus and Mazda. She was CMO at Chrysler in 2007 and 2008, before joining homebuilder Pulte Group in 2009. At McDonald's, she'll report to U.S. Chief Brand and Strategy Officer Kevin Newell.

On why McDonald's turned to an outsider, a spokeswoman said, "The management team determined she was the best candidate for the job."

But executives familiar with the business said that hiring an outsider may demonstrate to franchisees that the chain is looking to make real changes. That person could also build new relationships with frustrated franchisees.

McDonald's typically does not recruit senior executives from competitors, but the auto industry is similar to the fast food industry, at least operationally. Both industries have franchise models -- corporate at the top with local operators. Instead of franchiees, the auto industry has dealers. Both dealers and franchisees typically operate with local or regional co-ops, and often contribute to a national advertising fund. Corporate in many cases has final say over national marketing.

McDonald's has been at odds with franchisees for nearly a year. McDonald's rejiggered its 2013 marketing calendar to heavily promote value and dollar-menu items in an effort to get more customers in the door. Many franchisees complained that the increased value promotion and aggressive couponing of premium items like the McWrap chipped away at profits. In October, McDonald's announced its Dollar Menu & More, which gave the chain the felxibility to add pricier items to its value menu.

One executive noted that hiring a CMO experienced with a franchised model is a "sign that [McDonald's] is coming to grips with the need for material change. This tells you how stark the situation is with the owner-operators."

In a memo to McDonald's owner-operators regarding Ms. Wahl's hire, Mr. Newell wrote: "Her innovative and digital thinking plus strong roots in national and local traditional marketing tactics served her well most recently as CMO of homebuilder Pulte Group. She also spent 20 years in the automotive industry with successful brands like Lexus, Toyota and Ford. Her background working with auto dealers gives her a first-hand appreciation for our franchise model. ...I've gotten to know her well over the past few months. She brings fresh new thinking that I'm confident will help kick-start our momentum, with a focus on growing sales, [guest checks] and cash flow."

Ms. Wahl, who begins in early March, comes to the chain at a time when it's fighting to grow sales. The company enjoyed more than nine years of global positive sales until October 2012, when it posted its first decline. McDonald's sales in 2012, while up 3.3% in the U.S., have been decelerating since.

Third-quarter 2013 U.S. same-store sales rose 0.7%. Global same-store sales were up 0.9%.

Ms. Wahl's appointment also comes just two months after the chain began pressuring its agencies to step up their marketing. Ad Age reported that the chain was also looking at outside agencies for potential projects, though the company denied it was considering adding new agencies.

Ms. Wahl isn't the first senior executive to be recruited from outside in recent months. In October the chain recruited Yahoo and Amazon executive Atif Rafiq as its first chief digital officer -- another executive with little fast food experience.

Don Thompson, who took over the CEO role in July 2012, is a nearly 24-year veteran of the company. He succeeded Jim Skinner, who had been with the company for more than 40 years. Jan fields, who was president of McDonald's in the U.S., started her career as a crew member in the '70s. She left the company in late 2012 and was replaced by Jeff Stratton, who started as a crew member in 1973.

Marketing executives at McDonald's are also typically longtime employees. Neil Golden, whom Ms. Wahl replaced, had been at McDonald's since 1989 before leaving at the end of 2013. Mr. Newell joined McDonald's in 1989.

One notable exception in McDonald's marketing past is Mary Dillon, who was the chain's global CMO from 2005 until 2010. She was previously president of PepsiCo's Quaker Foods Division.

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