McDonald's (NYSE:MCD) terminated CEO Steve Easterbrook for having a consensual relationship with an employee. The company's board of directors said on Sunday that Easterbrook violated McDonald's policies and demonstrated "poor judgment."
Chris Kempczinski, who has served as president of the restaurant chain's U.S. business, will replace Easterbrook as CEO. Kempczinski will also join McDonald's board of directors.
"Chris takes the reins of this great company at a time of strong, sustained performance, and the board has every confidence that he is the best leader to set the vision and drive the plans for the company's continued success," Chairman Enrique Hernandez Jr. said in a press release. "He has the right mix of skills and experience to lead us forward having run our U.S. business, where franchisees are delivering strong financial and operational results, and overseen global strategy, business development and innovation."
Kempczinski joined McDonald's in 2015 and was tasked with directing the company's strategy, business development, and innovation efforts. As president of McDonald's USA, he oversaw the business operations of approximately 14,000 restaurants. Now as CEO, Kempczinski will be responsible for overseeing more than 38,000 stores spanning across more than 100 countries.
Investors will also want to see McDonald's stock continue its ascent. During Easterbrook's tenure as CEO, which began in March 2015, McDonald's shares nearly doubled.
It may be challenging for Kempczinski to deliver the type of returns shareholders have enjoyed in recent years. McDonald's third-quarter results fell short of Wall Street's expectations, sparking fears that intensifying competition could be taking a toll on McDonald's sales and profits.
Multiple rivals are making growth more difficult for McDonald's. Dunkin' Brands is opening new restaurants across the U.S. and adding new menu items in an attempt to wrestle away market share. Chipotle Mexican Grill's restaurants are once again enjoying tremendous sales growth, boosted by a new mobile app and drive-thru lanes. And Wendy's is planning to launch a new breakfast menu early next year.
The restaurant industry is likely to remain a fiercely contested arena, particularly if traffic trends remain weak. Kempczinski will need to help McDonald's continue to find a way to compete and win if he's to deliver the level of returns shareholders have grown accustomed to.
McDonald's board, for its part, believes Kempczinski is up to the task. "Chris was instrumental in the development of the company's strategic plan, which has enabled global growth and leadership, and has overseen the most comprehensive transformation of the U.S. business in McDonald's history," Hernandez said.
Kempczinski will need to hit the ground running, because his tenure as McDonald's CEO begins now.