It has been a tough week for McDonald's
Last week, Easterbrook was fired for violating company policy by having a consensual relationship with a McDonald's employee. Easterbrook was known as a very effective CEO, and McDonald's stock price nearly doubled during his tenure. Investors were thus shocked and disappointed by his "poor judgement", but he will still be receiving a multi-million-dollar exit package. Easterbrook was fired on Sunday, and by Monday morning the company had lost $4 billion in value.
On Tuesday, a former McDonald's employee filed a lawsuit against the fast-food chain claiming a manager at a Chicago-based franchise had repeatedly harassed her. Another former employee filed a charge saying she was transferred and had her hours reduced after reporting sexual harassment by another manager. Lawyers representing McDonalds workers told reporters that there are currently more than 50 claims and charges of harassment of female employees pending against McDonalds. They said the class action suit is not about one restaurant or one victim, but rather a "sexually hostile environment" that permeates the company.
McDonald's has a less than perfect record on sexual harassment. There have been dozens of complaint and charges filed against the company in recent years, and this filing comes a little over a year after 10 McDonald's franchises went on strike to pressure the company to enforce stronger policies to protect workers from sexual harassment. In response, McDonalds introduced an anti-harassment training program for U.S. workers in October 2019. The workers' lawyers argued, "they sound promising, but they're not enough."
The company will now also be facing the challenge of transitioning to their new CEO, Chris Kempczinski. Since the announcement of his promotion, memos have leaked showing friction between Kempczinski and franchise owners in the past. The memos showed that Kempczinski is known for proposing bold and expensive initiatives despite cash flow problems at the franchise level. His initiatives have faced opposition from the National Franchise Leadership Alliance, the official body elected to represent franchisees.
Following Easterbrook's ousting investors and analysts agreed that the stock would continue to fall as a result of the company's turmoil, but also argued that was proof that it was a good time to buy because the ousting was seen as a hurdle that the company would overcome. Wall Street's level of confidence in the company in the long run has yet to be seen, and these new class action lawsuits do not bode well. Shares reached their lowest point, 188.66 USD, after Easterbrook was fired, but shares have since reached 195.00 USD, higher than closing on the Friday before the ousting.