James Richard Cantalupo, who in 16 months as the top executive of McDonald's Corp. engineered a dramatic turnaround of the behemoth restaurant company, rescuing it from sliding sales figures and declining stock prices, died April 19 in Orlando after a heart attack. He was 60. Mr. Cantalupo had been in Orlando to meet with franchisees attending the McDonald's international owner and operator convention. Holding face-to-face discussions with the people who run McDonald's restaurants, listening and acting forcefully on their concerns were part of Mr. Cantalupo's multi-prong strategy largely credited with repositioning the company to meet a changing market in the fast-food industry. At the time of his selection as chairman and chief executive in January 2003, investment analysts painted a dismal picture for the future of the $41 billion company with 30,000 restaurants worldwide. Once one of Wall Street's most solid, reliable investments, McDonald's stock struggled in 2002 after 11 months of sales declines in restaurants that had been open more than a year. The company posted its first ever quarterly loss -- $344 million -- at the end of 2002 as it faced growing competition from a diverse collection of restaurants, shifting consumer attitudes about eating healthier foods and struggling economies in its overseas markets. Some questioned whether Mr. Cantalupo, an accountant by training and a 28-year veteran of the hamburger giant who came out of retirement to lead the company, was the right person for the job. The hands-on manager, who once headed international operations for McDonald's, quickly instituted changes to show that the company was nimble enough to respond to market demands. He cut capital spending by curtailing the company's rapid expansion plans, closed more than 700 restaurants, stepped up plans to offer such new menu items as entree salads and grilled chicken sandwiches and approved a new global marketing campaign aimed primarily at a younger demographic. Mr. Cantalupo was "a brilliant man who brought tremendous leadership, energy and passion to his job," Andrew J. McKenna, director of the company's board of directors, said in a statement released by the corporate headquarters in Oak Brook, Ill. "He made an indelible mark on McDonald's system." McDonald's also announced yesterday that Charlie Bell, president and chief operating officer, had been elected to succeed Mr. Cantalupo as president and chief executive. With the approach of the 50th anniversary of McDonald's in 2005, Mr. Cantalupo emphasized its need to present an image of a young, vibrant product. "We don't want McDonald's to look and feel 50 years old to our customers," Mr. Cantalupo said last month in a speech to Wall Street analysts. The company's financial picture improved during his short tenure, posting 11 consecutive months of sales increases. McDonald's stock closed at $26.75 per share yesterday, compared with $15.45 last April. For all his success, Mr. Cantalupo remained outwardly modest and intensely private. He cautioned against calling the financial turnaround a fait accompli, preferring to call it "momentum." With his calls to return to basics -- fast service, clean restaurants and hot food -- Mr. Cantalupo was seen as a throwback to McDonald's Corp. founder Ray Kroc in urging franchisees to focus on improvement in customer service and food quality. To keep tabs on restaurant performances firsthand, Mr. Cantalupo was known to pay surprise visits to McDonald's restaurants, where he listed their good and bad points on a scorecard printed on the back of his business card. "I want to leave knowing that the company is in a position to deliver sustaining results," he was quoted as saying in USA Today in December. Mr. Cantalupo, who went by "Jim," was a lifelong Chicago area resident. He was the son of an optometrist and grew up on the city's west side and graduated from the University of Illinois, where he originally studied architecture before switching to accounting. His first job after college was with Arthur Young & Co., forerunner of Ernst & Young. After eight years as an accountant, McDonald's Corp., one of his clients, offered him an in-house job as controller. He accepted the position in 1974, rose through the corporate ranks to vice president, senior vice president, district manager of the Chicago region, head of operations for the northeastern United States and finally president and chief executive of McDonald's International. He retired in 2001 but decided to return out of a sense of loyalty to get the company back on track, he said. He was on the board of trustees of Ronald McDonald House Charities, past chairman of the Chicago chapter of the National Multiple Sclerosis Society and past president of the International Federation of the Multiple Sclerosis Societies. Survivors include his wife, JoAnn Cantalupo; two children; and three grandchildren. James Cantalupo came out of retirement to lead the financial turnaround of McDonald's Corp. James R. Cantalupo, chairman and chief executive of the McDonald's Corporation , died this morning in Orlando, Fla., apparently of a heart attack, the company said. He was 60. Mr. Cantalupo died while attending a global meeting of McDonald's franchisees. "Our entire McDonald's system mourns this tragic loss," Andrew J. McKenna, presiding director of McDonald's board of directors, said in a statement. "Jim was a brilliant man who brought tremendous leadership, energy and passion to his job. He made an indelible mark on McDonald's system." Shortly after the announcement that Mr. Cantalupo had died, McDonald's said Charles H. Bell, the company's president and chief operating officer, would add the title of chief executive. The board's action was not a surprise. Mr. Bell, 43, was named president and chief operating officer in late 2002. Previously, he had held a number of top international positions, including president of McDonald's Europe. And he is a longtime McDonald's employee, having started with the company when he was 15 years old. "Like Mr. Cantalupo, Mr. Bell has strong international experience," Mark Kalinowski, a restaurant industry analyst at Smith Barney, wrote in a note to clients this morning. "He has worked for McDonald's for nearly 30 years. As they say, ketchup runs in his veins." In a statement, the board said: "Charlie Bell has worked side by side with Jim during these past 16 months to revitalize McDonald's all over the world. He is ideally suited and prepared to continue Jim's remarkable focus and discipline on our business." Joseph Buckley, an analyst at Bear Stearns Companies , said Mr. Cantalupo's death was "clearly a big loss" for McDonald's. But Mr. Buckley added that "the management team is strong enough to continue to execute the plan" that Mr. Cantalupo had put in place, and that "Charlie Bell was pretty clearly being groomed to be chief executive." A longtime McDonald's executive, Mr. Cantalupo retired as president and vice chairman at the world's largest restaurant chain in 2001, apparently ending a 28-year career. But in December 2002, McDonald's, which was under fire from disgruntled investors, franchisees and board members over declining earnings and erosion in its market share to rivals like Wendy's International , said that Jack M. Greenberg, who succeeded Mr. Cantalupo, would be retiring at the end of the year, and named Mr. Cantalupo to replace him. The announcement came just nine months after McDonald's had asked Mr. Greenberg to stay on the job until 2005. Since January of last year, Mr. Cantalupo had re-energized the business, sparking higher sales by appealing to health-conscious customers, introducing entree-sized salads and offering Happy Meals with fruit and vegetables. To placate franchisees, Mr. Cantalupo and his management team not only slowed the building of new restaurants but closed hundreds of existing ones, choosing to cultivate relationships with new and old customers. "He can be credited with being very decisive and making very sound capital allocation decisions," said Coralie T. Witter, a restaurant analyst at Goldman Sachs . "Very quickly he convinced investors that rapid growth in the number of restaurants was no longer the right strategy." Ms. Witter said she did not expect the strategy to change much with Mr. Bell leading the company. "I would be very surprised if there were major changes," she said. "Mr. Bell and Mr. Cantalupo crafted a lot of this together, so it would not be logical to see a change in direction." Janice L. Meyer, an analyst at Credit Suisse First Boston, said: "It is very hard to stop the direction you are leaning in to. The game plan is set for the short term." "The big question," Ms. Meyer continued, is what happens in the longer term, "and that is going to be Charlie's legacy. Over the next 12 months he won't change course." At the company's annual meeting in May 2003, Mr. Cantalupo told shareholders that the goal was to significantly improve customer service, food offerings and the overall cleanliness and appearance of the restaurants. In a speech he gave last month to Wall Street analysts, Mr. Cantalupo said: "We don't want McDonald's to look and feel 50 years old to our customers. We want McDonald's to be forever young." To emphasize that theme, the company had introduced a global advertising campaign meant to appeal to younger and hipper customers. Ads show people break-dancing, diving into the ocean with a surfboard or speeding down a water slide, all to a pop music soundtrack. The shift in tactics was financially successful. Last year, net income at McDonald's rose by 65 percent, to $1.47 billion. Extended restaurant hours and lower hamburger prices also contributed to rising sales in the United States during the twelve months ended March 31. Wall Street took notice: after three years in decline, last year McDonald's stock gained 54 percent, though it closed today at $26.75, down 71 cents, or 3.59 percent. The performance of McDonald's European operations, which account for between 35 percent and 40 percent of the company's profits, will be an important determinant of how McDonald's stock performs over the near term, Ms. Witter, of Goldman Sachs, said. "The United States, which accounts for about 60 percent of profits, is coming up against increasingly difficult comparison numbers," she said. "Investors are counting on Europe to help offset that." The company, which was founded by Ray Kroc, will celebrate its 50th anniversary in 2005. McDonald's first offered shares to the public in 1965. From a single hamburger stand in Southern California, McDonald's today has more than 30,000 restaurants worldwide and more than 400,000 employees. Mr. Cantalupo joined McDonald's in 1974 after working at Arthur Young & Company. He was named a vice president in 1975 and senior vice president in 1981. In 1987, he was appointed president of McDonald's International and president and chief executive of the corporation in 1991. |