Don Thompson is the star of the show. At McDonald’s annual Managers Peak Experience in Las Vegas–a conference for company management–attendees line up to shake his hand, take a picture with him, or just shoot the breeze as he walks through the event’s massive expo hall. The affable yet focused executive is an attraction in his own right, unable to make it through the crowd to peruse the countless _supplier displays. Among those in the queue to press the flesh is Tilmon F. Brown, CEO of New Horizons Baking Co. (No. 73 on the be industrial/service 100 list with $56.2 million in sales). Brown, who supplies buns to some 1,300 McDonald’s restaurants, is all smiles. Business is good, he says, and he offers words of greetings and continued success to Thompson.
As president of McDonald’s USA, the largest division of the mammoth restaurant chain, Thompson is responsible for ensuring the financial success of McDonald’s 13,700 locations in the _United States. And judging by his reception, he’s good at it. Some 24 hours earlier, the 44-year-old executive gave a rousing speech to the 16,000 attendees in which he discussed the state of the business, the company’s future growth plans, and the importance of each conference attendee, calling them ambassadors of the brand. Describing the mood as festive would be an understatement. Pyrotechnic displays shot flames dramatically into the air while musical performances entertained the crowd, many of whom were on their feet dancing and slamming noisemakers together. “The place was rocking,” recalls the Chicago native with a smile. “The noise level, the energy, the cheering, you would have thought you were in the middle of some major conference.”
Business is good at the Oak Brook, Illinois-based chain. _Second quarter revenues for McDonald’s jumped 12% to more than $6 billion, and sales at restaurants open for more than a year increased 7.4%. While the company recently reported a second quarter net loss of $711.7 million, or 60 cents a share, that was primarily the result of an expected $1.6 billion charge on the sale of restaurants in Latin America. Thompson’s contributions to the company’s top line are apparent. Total U.S. _revenues for 2006 reached $7.464 billion, compared with $6.995 billion in 2005 and $6.525 billion in 2004–solid growth. Same-store sales for U.S. locations weren’t too shabby either, increasing 5.2%, 4.4%, and 9.6%, respectively, during that period.
Much of that growth was the result of initiatives derived from Thompson’s leadership: a more appealing breakfast menu, _specialty coffees, and healthier menu options such as the Asian Salad and Snack Wrap. It wasn’t always so cheerful within the golden arches. In the 1990s, the company’s growth slowed as America became more health conscious and most of McDonald’s high-calorie menu offerings fell out of favor. By the turn of this century, profits had eroded dramatically, _culminating
in _January 2003 with the company’s first quarterly loss since going public in 1965. A turnaround plan was _needed–and Thompson stepped in. As regional vice president of the chain’s San Diego region, Thompson had already improved _performance at some 330 restaurants there.Business has turned around in the U.S. Now some 26 million _customers visit a McDonald’s each day–and that number is expected to grow. Mark Basham, equity analyst for Standard & Poor’s, believes the trend toward eating out more will continue, which will only help McDonald’s. This, combined with an expanded menu, is among the reasons he maintains a strong buy recommendation on the company’s stock. “Their healthy menu alternatives have turned around same-store and same-restaurant sales over the last three years, and I expect that to continue,” he says. “This turnaround program has been going on for three years, but they’ve also taken significant steps to improve franchise relations.”
Thompson, who has a degree in electrical engineering from Purdue University, began his career at McDonald’s in 1990 as a restaurant systems engineer. Since then, he excelled in a slew of positions that have one common thread: They performed better from a business and financial standpoint after his arrival. He did it by focusing on quality not quantity, expanding menu offerings, and improving customer satisfaction and efficiency. In recognition, he has earned numerous promotions throughout the $21.6 billion corporation. He also earned the title black enterprise 2007 Corporate Executive of the Year.
Ironically, Thompson initially had no desire to work for the _golden arches. After graduation, he landed a job designing radar jamming systems for fighter planes as an engineer specialist with Northrop Corp. in Rolling Meadows, Illinois. Today, defense contractors are faring well, but in the post-Cold War years of the late 1980s the industry was cooling off. As a result, there was _downsizing, and Thompson, who oversaw a team, sometimes was the bearer of bad news. “Being a government contractor, we’d get a list on a Monday morning. It was last in, first out, so it was not based on competency,” he recalls. If team members were on the list, Thompson would tap them on the _shoulder and instruct them to follow him. “You couldn’t tell them any more than that. You’d lead them into a room where they had to be debriefed from a security perspective, and they were walked back to their desk. Whatever they could carry in their arms is what they could carry out, because it was a secure facility. It was tough.”
While Thompson was feeling less than happy with his career path, fate intervened. A cold-call from a recruiter would have a dramatic impact on his future. “He said things like robotics, control circuitry, feedback loops–all the things that excite an engineer,” recalls Thompson. When the recruiter said the name of the company was McDonald’s, Thompson assumed he meant McDonnell Douglas, an aerospace manufacturer/defense contractor that later merged with Boeing.
Thompson recalls the rest of conversation:
Thompson: “When should I come to St. Louis for the interview?”
Recruiter: “St. Louis?”
Thompson: “Yeah, isn’t that where McDonnell Douglas is?”
Recruiter: “This is McDonald’s hamburger.”
Thompson: “You got the wrong guy, because I’m not flipping hamburgers for anybody.”
 Thompson didn’t give the offer a second thought, particularly concerned about how his grandmother would react. She raised Thompson and, fearing the gang activities in the North Side of Chicago in the 1970s, moved him to Indianapolis. “She gave everything she had to get me into and through Purdue,” he says.
The day after rejecting the offer, Thompson’s phone rang again. This time an engineer who’d recently left Bell Laboratories to work at McDonald’s invited him to visit. Thompson accepted and later took the job, where he helped design robotics for food transport, digital systems, filtration systems, and control circuits in fryers and other cooking equipment. His first of many promotions came in 1991, when he was named project manager.
Things were going well, but Thompson wasn’t sure how far he could go in engineering. “The group that was really seen as the future leaders in the company were the ones that had come up through the restaurants–academia didn’t mean too much,” says Thompson. “And so being in the engineering department and not in restaurant operations, it became apparent to me that maybe I needed to look at something a little different.”
A bit frustrated, Thompson met with his future mentor, Raymond C. Mines, a senior vice president. At the time, McDonald’s U.S. operations were split into 40 regions that made up seven zones. Mines oversaw one of those zones and was therefore responsible for one-seventh of the restaurant’s U.S. business.
Under Mines’ mentorship, Thompson transitioned to the operational side of the business in 1993, accepting a position as director of strategic planning and quality management. Here, he would travel around the U.S. and facilitate sessions on team building and dynamics. “I would facilitate topics that I didn’t have any idea about, but I knew how to get people to talk about an issue and try to move them to some kind of problem _solving,” he says. This skill set would prove invaluable.
Mines felt it was time for Thompson to get his hands dirty–literally. In 1995, Mines guided him into the company’s Accelerated Development Program to get restaurant experience. He traded in his suit and tie for a crew uniform and went to work with a franchisee in South Chicago. For six months, he flipped burgers, cleaned toilets, worked as a cashier, and co-managed the restaurant. He loved it. “When the six months were up, I said to Raymond, ‘If you can leave me in the restaurant and continue to pay me a director’s salary, I’ll be just fine.'”
Not long after completing the program, Thompson was promoted to director of operations for McDonald’s Denver region and in 1998 was named regional manager of San Diego, where he was charged with overseeing more than 300 restaurants in the area as well as creating a plan to turn around their performance. At the time, San Diego was ranked 39 out of McDonald’s 40 regions from a revenue-generating standpoint, so Thompson had work to do. First his team focused on marketing, and they generated a consistent message that focused on value. Under his leadership, operations was the next focal point, and restaurants were kept clean and efficient.
His plan offered incentives for crew members and managers who met certain objectives. Prices of such items as hamburgers were lowered to as much as 29 cents a day or two a week to drive traffic. The idea was that if more people came in and had good experiences, they’d keep coming. The end result: the region went from an abysmal rank of 39 to No. 2 in the nation within a year.Â
By 2001, Thompson would quickly rise to the position of president of the Midwest Division and its 2,200-plus restaurants. A year later, business was getting soft and McDonald’s reorganized. Among the changes was a reduction in the number of division presidents from five to three. The company needed to downsize and refocus. Voluntary retirements were offered, and the company’s 40 regions were combined into 21. Business needed stimulating and again Thompson was tapped. Mike Roberts, who was president of McDonald’s USA at the time, asked Thompson to head back to San Diego and oversee the company’s 4,000 locations that constituted its Western Division.
Two years later, Thompson packed his bags and headed back to Illinois, this time as executive vice president of Global Innovation Orchestration. In addition to having a rather long title, Thompson was part of a team that looked at global strategies. Thompson worked with each of McDonald’s four global business units–North America, Latin America, Asia/Pacific/Middle East/Africa, and Europe–to develop effective menu items and an efficient operational process. What McDonald’s gained was a host of menu items customized to local tastes, including a shrimp burger in Japan to accommodate the love of seafood there. What Thompson gained in the process was valuable international experience. Business began to pick up.
The company was turning around. Under the “Plan to Win” program announced in 2003, the company’s U.S. operations focused on service and selection at existing locations rather than developing new locations. The menu strategies focused on chicken, breakfast, beverages, and convenience. McDonald’s introduced healthier alternatives and additional breakfast _offerings and nixed their super size option.
Just as McDonald’s was in the beginnings of its turnaround plan, CEO James Cantalupo
suffered a fatal heart attack while at a company convention in Orlando, Florida. Charlie Bell, who was president and chief operating officer, succeeded him. However, within a year, Bell too passed away, of colon cancer. Jim Skinner was named CEO, Roberts moved up to CFO of the global company, and Thompson was bumped up to executive vice president and chief operating officer of the U.S. business to oversee the field and everything that happened within each of the restaurants daily. He was back on the revenue side with each of the three division presidents in the U.S. reporting directly to him. In August 2006, Roberts resigned and Ralph Alvarez was promoted to COO of the global company. Thompson then became president of McDonald’s USA. Now he is leading the company into its fifth year of consecutive growth and is helping to move it into other areas such as specialty coffees (where it will compete with Starbucks). “He’s a great competitor. That’s one of the items that I’ve always admired about Don,” says Alvarez. “He’s always looking and calling those that are having success and figuring out what’s going on and how to spread that throughout the organization. I think that’s one of the most important things that a leader could do, especially in a company like ours where we have the same business in 14,000 different locations.”
Skinner concurs: “He’s a very people-oriented young man who is very aggressive about relationships regarding the development of people, which I think he learned a lot from his own development in the system. I think his abilities to communicate and lead are probably his strongest assets when it comes to the alignment of his team and the organization. Of course, he’s been very successful and he’s in a very key job right now as president of McDonald’s U.S., which is the big dog in the pound.”
Just as Mines mentored Thompson, Thompson in turn is helping usher in new black managers at McDonald’s. “Don’s a good example of an African American who has worked his way through the ranks,” says Mines, “who hasn’t forgotten where he came from and the importance of mentoring those behind him.”
Donald Thompson
Title: President, McDonald’s USA
Born: 1963
Education: Purdue University, bachelor’s in electrical engineering
Residence: Burr Ridge, IL
Family: Thompson and his wife, Elizabeth, have two children
Hidden Talents: Cooking, particularly Southern cuisine
Breaking Ground: Thompson is the first African American to hold the position of President, McDonald’s USA and Chief Operations Officer, McDonald’s USA
Personal Quote: “We have a rich heritage as African Americans. Don’t get into the pity party of what’s not going to be done for you, because there are so many things you can do for yourself. Others will see what you do and will look to support and help you.”