McDonalds 2003 Annual Report Download - page 3

McDonald’s 2003 page 1
Imade a pledge to you in this letter last year.
I committed that McDonald’s would build a
rock-solid foundation that could provide reliable
top-line and bottom-line growth, and predictable,
solid returns on invested capital.
Today, I am proud to report that we are delivering
on our commitment.
As you will recall, our business was in serious
need of improvement when I became Chairman and
CEO at the beginning of 2003. I said back then that we
had taken our eyes off our fries, and we paid a price.
Our performance had disappointed our customers,
our shareholders and ourselves. We knew we had a
lot of work to do to right McDonald’s ship and rebuild
our foundation to support future growth.
2003 a watershed year
Today, I can tell you that 2003 was a watershed year
for McDonald’s. In saying this, I am relying on the
dictionary definition of watershed as “a turning point
that marks a change of course.” Credit for this remark-
able change in such a short time is shared among
our dedicated owner/operators, our suppliers and
our employees—they exceeded our expectations.
Together, working with McDonald’s leadership team,
we reestablished McDonald’s as an industry leader.
In 2003, we promised that we would redefine
our approach to growth...and we delivered by focus-
ing on adding more customers to existing restaurants,
rather than just adding more restaurants to our
System.
This meant a remarkable cultural change after
48 years—learning to grow by being better, rather
than being bigger. We reduced capital expenditures
by $700 million to reflect our strategic shift. We
narrowed our non-McDonald’s brand activity, and
we focused our attention on our customers.
Most important, we made operations excellence
and marketing leadership the cornerstones of every-
thing we did last year. If an initiative didn’t positively
impact our customers or our restaurants, it wasn’t on
our agenda. We called this “clearing the decks,”
which produced much-needed focus and discipline.
As a result, we ended 2003 with positive compa-
rable sales for nine consecutive months in the U.S.
and eight consecutive months worldwide.
We also promised that we would build brand
relevance...and we delivered with the launch of a
global leadership marketing campaign.
McDonald’s is turning 50 years old next year. This
is an impressive business milestone—but we don’t
want to look or feel 50 years old to our customers.
Our unprecedented worldwide “i’m lovin’ it”
campaign—with its contemporary look and sound—
has connected with customers in a powerful way. It
has created excitement. It is driving increased sales.
And it is bringing the magic back to McDonald’s
marketing.
“i’m lovin’ it” has helped us to think differently
about how we present ourselves to customers, and
we’ll continue to use this creative approach to build
relevance with our key customer segments.
“i’m lovin’ it” targets young adults, women and
families—and we’re proud that the campaign was
ranked one of the five best of 2003 by The Wall Street
Journal.
We also promised that we would improve our
restaurant operations...and we are making progress
on a variety of fronts.
We are improving our food taste attributes and
adding new menu items that our customers want.
We are working closely with our owner/operators
to improve the efficiency and effectiveness of our
restaurants. We’re working with our suppliers to iden-
tify production and sourcing efficiencies worldwide.
And we’re measuring our results in every restaurant
to help us improve even further in the future.
Dear shareholders:
tasty