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Man behind McDonald's reorganization named CEO

A month after McDonald's Corp. said it would overhaul the kitchen system in its U.S. restaurants and streamline its home office, the executive behind the reorganization got the nod to run the entire company.

Jack Greenberg, vice chairman of the corporation and chairman and chief executive of the U.S. division, has been promoted to president and chief executive of the worldwide company, McDonald's said Thursday. He will replace Michael Quinlan, who will remain chairman.

The leadership change, effective Aug. 1, had been expected for months and comes at a time when McDonald's is trying to improve its food quality and win back market share. The company has also suffered a recent string of product flops and marketing blunders. Tapping Greenberg is seen as a turning point in the company's overall strategy to move beyond those problems.

"Greenberg has been behind many of the most recent changes, in particular the refocus on returns in the U.S. and the "made for you' food production system, which will hopefully address some of the food-quality issues," said Jeffrey Omohundro, an analyst who follows the company for Wheat First Union. "His leadership in those areas is being recognized. I think it's Greenberg's ship, and he is the captain."

The company also announced Thursday that James Cantalupo, 54, president and chief executive of McDonald's International, would become chairman of the international business and vice chairman of the worldwide company. Alan Feldman, 46, who is president of the Northeast division of McDonald's USA, will become president of the U.S. business.

With the exception of Feldman, who was recruited from Pizza Hut Inc. in 1994, the appointments continue McDonald's tradition of promoting from within.

McDonald's for years proudly proclaimed its executive staff had started working on the grill and ascended the higher ranks. The practice has produced a culture in which managers understand the intricacies of the quick-service food business, but the company has been criticized for not always having the fresh perspective outsiders can bring.

Greenberg, who is 55 and has worked at the company for 16 years, said one of his priorities would be to "make sure I foster an environment that helps us grow faster and has the right people in place." Key to the strategy will be the reorganization of McDonald's headquarters in Oakbrook, Ill., where about 2,700 workers will be dismissed, and the replacement of its old method of frying burgers in bulk with a made-to-order system to produce hotter, fresher food.

Quinlan, 53, said he would remain actively involved in the business. Even so, he said, "I've been CEO for more than a decade, and I think it is time to utilize the tremendous depth of management skills at McDonald's as we move into the next century."

On Quinlan's watch, McDonald's rapidly expanded its American restaurant base and increased its presence to 109 countries. It now has 23,000 restaurants, half of them in the United States, and plans to open 2,100 new restaurants this year, 85 percent of them outside the country.

But until recently, the company's organizational structure in the United States was too cumbersome, analysts said, and some of its product introductions and marketing efforts have not gone well. The Arch Deluxe sandwich, for instance, never really caught on, and a price-cut promotion last year called "Campaign 55" confused some customers. It was pulled after two months.

Greenberg, though, has been able to win over franchisees who had become frustrated by the missteps. He has made himself accessible and changed the company's structure to give regional division heads more authority to better manage their territories, said David Trossman, who follows the company for BT Alex. Brown. "He has really played a big role in helping get the franchisees back on board," he said.

McDonald's stock rose $2.43} to close as $61.75.

_ Information from Associated Press was used in this report.

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