How do you revive an aging brand?
If that’s a challenge you’ve ever struggled with (we’re familiar with it at Fortune), then I’m sure you’ll be fascinated by Beth Kowitt’s story on Steve Easterbrook. Easterbrook became CEO of McDonald’s in March of 2015, at a time when the company’s revenues, profits and same store sales were all in a slump, and numerous product launches – Shamrock shakes, the McRib, the McLean burger, salads, etc. – had done little to change the trajectory.
Easterbrook – whose mottos are “act first, talk later” and “progress over perfection” – has done two big things during his short time as CEO. One is to launch all-day breakfast, which has proven a surprising success. The other is to start a complete remake of the way the company purchases chickens and eggs, which account for roughly half the items on the menu. He has ended the use of certain antibiotics in the company’s chickens, a key goal of health advocates, and he has launched a ten-year plan to liberate chickens from their cages.
Beth visited a cage-free chicken farm, and when you read her account, you may, like me, find it difficult to conclude the chickens are leading happier or more fulfilled lives. But so be it. The company is clearly making a bold – and costly — effort to show it can adapt to a very different set of consumer expectations than when the first golden arches went up in 1953.
McDonald’s cage-free commitment is transforming the food industry. Nearly 200 other companies have now followed suit. For that reason, we’ve given the company a spot on our new Change the World list. Whether the change will revive the company’s fortunes remains to be seen – although all-day breakfast already has managed to raise same-store sales for four quarters in a row.
The story is in our September magazine, but you can read it online now. Other news below, including Viacom CEO Philippe Dauman’s stunning $72 million exit package. Failure has its benefits.
• Dauman’s Golden Sunset
Viacom’s chief operating officer Tom Dooley is set to replace Philippe Dauman as CEO of Viacom, at least on an interim level, as part of a settlement nearing completion between him and National Amusements, Sumner Redstone’s holding company (now under the control of his daughter Shari). The Wall Street Journal indicates that Dauman’s exit package, after nearly 10 years at the helm in which Viacom has clearly under-performed the market, will be worth around $72 million. The best thing that can be said about that is that it’s $13 million less than some reports had suggested. It also said he will get one last chance to convince the new board of the merits of selling a minority stake in Paramount Pictures. Dauman will continue as non-executive chairman until Sept. 13, before being replaced by Eversource Energy’s Thomas May, the WSJ said. Fortune, WSJ, subscription required
• A Rash of Uber News
Uber was all over the news like a rash yesteday. A San Francisco judge dismissed a proposed $100 million class action settlement brought against it by 385,000 current and former drivers as inadequate, overshadowing the more upbeat announcement earlier in the day of a $300 million deal to partner with Volvo in developing autonomous cars (testing begins this month in Pittsburgh). It’s also agreed to buy the autonomous truck development project Otto, headed by Anthony Levandowski and other ex-Googlers, in a deal worth $680 million (according to Bloomberg estimates). Oh, and Taiwan said Uber owes back taxes after changing its laws on digital services providers, in another example of countries around the world not wanting to be taken for a ride, if you’ll pardon the expression, by the Valley bros. Other than that, a quiet day. Fortune
• Clintons to Scale Back Foundation
The Clinton family is undertaking some overdue damage control measures with regard to its controversial charity foundation, after rising criticism over conflicts of interest. The Wall Street Journal reported that former President Bill Clinton and his daughter Chelsea will stop raising money for the Clinton Foundation and turn it over to independent appointees if Hillary is elected President in November. The ex-President had continued to give paid speeches months after his wife announced her presidential bid last year. The Clintons also plan to end one of the foundation’s signature events, the Clinton Global Initiative. Cynics would argue that by the time Hillary is elected, the foundation will have served its ultimate purpose anyway. WSJ, subscription required
• Wal-Mart’s Feelgood Factor
Wal-Mart raised its profit guidance for the full year after announcing a better-than-expected 1.6% rise in like-for-like sales in the second quarter (the market had expected 1%). The world’s biggest retailer notched a seventh straight quarter of increase in footfall, but more importantly broke a trend of slowing growth in online sales, which accelerated to 11.8% from 7% in the previous three months. The only fly in the ointment was the dramatic drop in sales at Asda, its U.K. unit. Comparable sales there plunged 7.5% in the quarter, its worst-ever performance, as it replaced Tesco in the crosshairs of the aggressively expanding German discounters Aldi and Lidl. Fortune, BBC
Around the Water Cooler
• Deutsche Whistleblower Rejects Reward in Disgust at SEC
A whistleblower who tipped off the Securities and Exchanges Commission about fraudulent accounting at Deutsche Bank at the height of the financial crisis has refused to accept his part of the $55 million reward paid out. Eric Ben-Artzi, who was a risk officer at Deutsche, said that the SEC should have fined individual executives at Deutsche, rather than its shareholders, arguing that the ‘revolving door’ between the two stopped it from doing so: Robert Rice, the chief lawyer in charge of the internal investigation at Deutsche in 2011, became the SEC’s chief counsel in 2013 (Ben-Artzi was fired after raising his concerns about the investigation with Rice). Robert Khuzami, Deutsche’s top lawyer in North America, became head of the SEC’s enforcement division after the financial crisis. And their boss, Richard Walker, the bank’s longtime general counsel was once head of enforcement at the SEC. Ben-Artzi argues that SEC chair Mary Jo White bears ultimate responsibility for the Deutsche fine. FT, metered access
• Mobile Carriers’ Phony Peace
The price war between mobile network operators may be coming to an end, but they remain the best of enemies in other respects. Thursday, T-Mobile said it would roll out a new unlimited data plan to replace its current ones with monthly limits, causing Sprint to respond by cutting prices on its own unlimited plans. More entertaining, however, was the flame war on social media between their respective CEOs: Sprint’s Marcelo Claure called T-Mobile’s new plan “crappy” and its CEO John Legere a “con artist” after Legere accused Sprint of ‘copy-pasting’ his strategy. Claure appeared to be having a stressful day, also lashing out at Verizon Wireless’s incoming CEO Ronan Dunne with a “Delete your account” tweet. Fortune
• Bosch Hit With First VW-Related Lawsuit
German engineering group Robert Bosch may finally be on the hook for its role in Volkswagen’s diesel emissions scandal. A court filing in San Francisco alleges that the company, which supplied the engine control software that duped regulators into believing that VW’s diesel engines were within legal pollution limits, was “a knowing and active participant” in the fraud. Bosch has consistently argued that it isn’t responsible for how customers (of whom VW was only one) used its software. Federal prosecutors have been looking into Bosch’s involvement since last November but don’t appear close to filing charges themselves. In related news yesterday, Harley-Davidson agreed to pay a $12 million fine for selling 340,000 “super tuners” that led to its bikes breaching EPA limits. Fortune, Fortune
• Tyra Banks, Stanford Professor
And finally, to take us into the weekend on an uplifting note, meet Stanford Graduate School of Business’s new professor: supermodel Tyra Banks. Four years after graduating from Stanford’s biggest B-school rival Harvard (she took a nine-week program for executives called the Owner/President Management program to help her launch her TYRA Beauty cosmetics business), Banks is moving to the front of the class-room. The website Poets & Quants says she’s scheduled to co-teach a spring elective for MBA students called “Project You: Building & Extending Your Personal Brand”. After 810 episodes of her own show, there’s not much disputing her authority on that point. Pity the poor wonks whose lectures clash with her.Poets & Quants