Industry mourns, McD regroups after chief exec. Cantalupo dies

Nation's Restaurant News, April 26, 2004 by Amy Garber

OAK BROOK, ILL. -- The April 18 death of McDonald's Corp.'s chairman and chief executive, Jim Cantalupo, shocked the foodservice industry and sent jitters through Wall Street, but restaurant analysts voiced confidence that the company's upbeat strategic direction would remain on course.

Cantalupo, known for orchestrating McDonald's biggest inter national expansions and for reversing the chain's sagging fortunes since he came out of retirement early last year to spark a substantial sales turnaround, died of an apparent heart attack while attending a McDonald's franchise convention in Orlando, Fla. He was 60.

McDonald's board moved quickly to name a successor, promoting 43-year-old Australian Charlie Bell, the company's president and chief operating officer, to the additional post of chief executive officer. Bell, the first non-American CEO of McDonald's and only the sixth person to hold that post in 49 years, was considered by many to be Cantalupo's heir apparent, although the transition was not expected for several years.

Andrew J. McKenna, 74, presiding director of the company's board, was named McDonald's nonexecutive chairman to "work closely with Charlie and the entire management team to ensure that this transition is smooth and effective," the company said.

"Our entire McDonald's system mourns this tragic loss, and our thoughts and prayers are with Jim's wife, Joann, and his family," McKenna said in a statement. "Our deepest sympathies go out to them.

"Jim was a brilliant man who brought tremendous leadership, energy and passion to his job. He made an indelible mark on McDonald's system."

Although Cantalupo's career with McDonald's spanned nearly three decades, his tenure as chairman and chief executive lasted only 16 months. Nonetheless, Cantalupo is credited with revitalizing the ailing burger behemoth by launching new marketing and menu initiatives, such as a popular line of entree salads and the breakfast McGriddle sandwich. Under Cantahipo's stewardship, the chain closed underperforming restaurants and slowed its global unit growth to divert resources to improving operations and cracking down on service problems. In addition, the aging brand, looking to become more hip, ushered in its first global ad campaign, with the "i'm lovin' it" theme.

On the eve of his death, Cantalupo was in Orlando with franchisees who had gathered for the chain's biennial owner-operator conference. The meeting was expected to be celebratory, based on McDonald's high-flying sales momentum, but Cantalupo died only hours before he was to address hundreds of franchisees from around the world.

"The irony is that this perhaps would have been the finest moment of Jim's professional career," longtime McDonald's franchisee Irwin Kruger, who operates seven units in New York, said. "I think this convention would have probably been for Jim a triumph of his life's work," adding that owner-operators' confidence had been at "an all-time high."

Oak Brook-based McDonald's recently announced that it expected first-quarter earnings per share to be up 38 percent, versus last year's result for the quarter, with a 14-percent jump in U.S. same-store sales and a 3.5-percent rise in Europe's comparable-restaurant sales.

Still, shortly after the news of Cantalupo's death, McDonald's stock tumbled more than 2 percent in one day to fall below $27 a share.

"While this is a blow for the company, we think McDonald's turnaround is on track and think the stock will ultimately rebound over time," restaurant analyst Coralie Tournier Witter of Goldman Sachs in New York noted. She described Cantalupo as "well respected by investors and franchisees" and said the news of his death is "negative for the company and the stock," but she also pointed out that McDonald's management team has "a deep bench."

Restaurant analyst Mark Kalinowski of Smith Barney in New York characterized Bell as a "solid successor," based on his experience leading McDonald's largest oversees divisions, including Europe as well as the Asia, Pacific, Middle East and Africa region. Bell also managed the chain's 700-plus units in Australia.

"He has worked for McDonald's for nearly 30 years," Kalinowski noted. "As they say, ketchup runs in his veins. He joined McDonald's as a part-time crew member when he was 15 years old."

Cantalupo's sudden death reverberated throughout the foodservice industry as McDonald's archrivals extended their condolences.

"Our deepest thoughts and prayers go out to Jim Cantalupo's friends and associates in the McDonald's system around the world," said Wendy's International chairman and chief executive Jack Schuessler in a statement. It went on to describe Cantalupo as "a great restaurant operator who really understood the importance of putting the customer first. He was a strong, talented leader and a true ambassador of our industry, who touched the lives of countless people during his long tenure at McDonald's Corp. He will truly be missed."

Rival Burger King Corp. also expressed its support.