- McDonald’s pledged support for Black Lives Matter with donations and diversity-centric hires.
- Critics are skeptical enough is being done. Some Black executives and franchisees are even suing.
- We spoke with more than a dozen McDonald’s insiders about the fast-food giant’s efforts.
- Visit the Business section of Insider for more stories.
Word travels fast within the massive web of franchisees, employees, and suppliers that make up McDonald’s. So when a 2019 marketing presentation showed a burger recipe made with “coon cheese,” it wasn’t long before Jim Byrd, a Black McDonald’s operator who owns two locations in Tennessee, was texted a photo from a fellow franchisee.
Chris Kempczinski, who was the US president of McDonald’s at the time and is now its CEO, apologized for the recipe, which originated in Australia. (The Australian brand Coon Cheese got its name from cheese maker Edward William Coon, not the dehumanizing, anti-Black slur, but recently announced it will change its name due to criticism.)
Byrd thought the incident revealed larger problems. Dozens of Black corporate staff and franchisees had disappeared from McDonald’s in recent years.
“It makes you start to look at or wonder about the leadership and who’s in the room,” Byrd told Insider in 2019. “You start looking around, and there’s no representation.”
Last October, Byrd and his brother became the named plaintiffs in a class lawsuit made up of Black franchisees suing McDonald’s over racial discrimination. The lawsuit was at least the fifth major discrimination suit filed against McDonald’s in 2020.
Black restaurant workers said they were called “ghetto.” Two Black executives alleged that a coworker in the corporate office used the N-word, while another criticized “angry Black women.” Former franchisees are seeking more than $1 billion in damages, saying the company sent them on “financial suicide missions.”
As McDonald’s was battered by racial-discrimination suits, the company publicly backed the Black Lives Matter movement, matching support with new hires and donations. (McDonald’s declined to comment on the record on the “coon cheese” incident.)
Insider spoke with more than a dozen current and former McDonald’s franchisees and corporate executives in the past year to understand the company’s work around racial equity in light of discrimination allegations.
Insiders said events that took place in 2020 helped bring about a racial reckoning at McDonald’s. The company had new leadership with an avowed focus on values, corporate America was grappling with its role in enforcing white supremacy, and Black insiders at McDonald’s were ready to speak out.
And while there are signs of progress, some insiders said McDonald’s new guard still needs to back its words with more actions.
‘Black lives matter’ at McDonald’s
After the police killing of George Floyd, McDonald’s took unprecedented actions.
It released a solemn video listing the names of Black people killed by police or in incidents of racist violence. It ended with the words “Black lives matter.” The video was coupled with a million-dollar donation to the National Urban League and the National Association for the Advancement of Colored People.
Behind the scenes, McDonald’s executives sounded equally determined to take a stand, according to an internal systemwide webcast in early June, a recording of which Insider viewed.
“There were some who responded to my note who suggested that we should simply stay out of it,” Joe Erlinger, the head of the US business, said on the webcast in reference to McDonald’s support for Black Lives Matter.
He went on: “That’s not the type of leader that I am, and that’s not the type of brand that McDonald’s should be. . . . Being silent is not an option. We must lead. We cannot go back to business as usual.”
In June, McDonald’s created a global advisory council on diversity, equity, and inclusion, building an international plan to craft consistent but locally relevant policies and programs. In July, the company announced plans to establish “time-bound commitments” to diversity, including recruiting more diverse franchisees.
In the fall it made big-name hires, including former Obama advisor Katie Beirne Fallon, who became McDonald’s first chief global impact officer, and Reggie Miller, who was tapped as the global chief diversity, equity, and inclusion officer.
“We cannot be complacent,” Miller told Insider in an email interview in January. “There is no end date on progress needed to ensure equality for all. We need top-down and bottom-up accountability, engagement, and shared responsibility to drive change.”
While some said they felt the efforts were helping, others told Insider they were less convinced.
Critics remain skeptical of McDonald’s efforts
Among the skeptics is Jim Ferraro, an attorney representing current and former Black McDonald’s franchisees in two racial-discrimination suits seeking more than $1 billion in damages.
Black former franchisees connected with Ferraro in early 2020, following an Insider investigation into inequalities at McDonald’s. The investigation found that locations owned by Black franchisees netted $68,000 less a month, on average, than McDonald’s overall franchisee average. Black franchisees said they were not offered the same opportunities as their white counterparts, but faced stricter expectations.
Ferraro told Insider his team presented McDonald’s with a draft of the complaint in early June, with the possibility of settling out of court. That’s when McDonald’s launched its “huge PR campaign,” he said. In addition to its donations and pledges, the company began renegotiating Black franchisees’ rent deals behind the scenes, people with direct knowledge said.
“They’re doing all these things because they want the current operators to become their allies, but they’re buying them off,” Ferraro said.
Worker-advocacy groups said they were similarly skeptical.
In 2020, McDonald’s came under fire in light of workers’ safety concerns during the pandemic, lack of paid sick leave, and sexual-harassment allegations. Karesha Manns, a McDonald’s worker in Memphis, Tennessee, argued in a January opinion column that fast-food workers’ wages were a question of racial justice. She wrote that “raising the minimum wage to $15 an hour would increase wages for nearly 40% of Black workers.” Restaurant workers in Florida and Illinois sued McDonald’s, saying they faced racial discrimination on the job.
Deatric Edie, a McDonald’s worker involved in the Service Employees International Union-backed Fight for $15 campaign, said in June that McDonald’s “cannot be against ‘systemic oppression'” when its “policies force hundreds of thousands of Black and Brown workers to live in poverty.”
“You cannot claim to be against ‘inequity, injustice and racism’ while lobbying against paid sick days during a pandemic, putting profits ahead of workers’ safety, ignoring sexual harassment and fighting efforts of Black and Brown workers to join together in a union,” Edie’s statement went on.
McDonald’s is aware of criticism — but is it doing enough?
Because 95% of McDonald’s locations in the US are owned by franchisees, the company does not directly control the vast majority of workers’ wages or benefits, such as sick leave. But the chain has committed to focusing its 2021 investments in supporting workers in franchised locations.
“As you’ve heard us say before, for many years, McDonald’s had two distinct faces,” Miller said. “One was that of a big global corporation. The other was that of the McDonald’s you grew up with, where you know your order, know your server, and feel at home. The distinction between the corporate and consumer brand doesn’t exist today.”
The money netted by Black franchisees, on average, continued to improve through 2020 against McDonald’s overall franchisees’ average, a source with knowledge confirmed to Insider.
Still, some insiders — including individuals involved in the discrimination lawsuits — said they did not trust McDonald’s to address racial discrimination if the chain does not acknowledge past grievances. The company denied allegations made in three racial-discrimination suits filed in 2020, two of which were filed by franchisees and one that was filed by former McDonald’s executives Vicki Guster-Hines and Domineca Neal.
“We will defend against these lawsuits even as we move forward with the actions needed to foster an environment where equitable opportunity is part of the lived experience for McDonald’s franchisees, suppliers and employees,” Miller said.
All three complaints connect allegations of racist incidents to the loss of Black leaders at McDonald’s in recent years. According to the complaints, Black franchisees and executives were routinely passed over for opportunities when Kempczinski was running the US business and Steve Easterbrook — who was ousted in November 2019— was CEO.
There were 186 Black McDonald’s franchisees in 2020, down from 377 in 1998, according to the franchisees’ complaint. In 2019, there were just seven Black corporate officers at McDonald’s, down from 42 in 2014, according to Guster-Hines and Neal’s complaint.
McDonald’s said the shifts were in line with wider restructuring. Nearly 30% of McDonald’s current franchisees come from under-represented groups, the company said. Half of its officers are from underrepresented populations, and 17% are African American.
By comparison, 11.6% of Starbucks’ officers at the level of senior vice presidents or higher are Black. Just 6.3% of vice presidents at the coffee giant identify as Black, a report released by Starbucks in October found.
McDonald’s has a greater representation of Black officers in leadership than fellow corporate giant Walmart. A fourth of Walmart’s officers are people of color, and just 7% identify as Black or African American, data from mid-2020 showed.
The new guard at McDonald’s is plagued by past scandals
Black insiders who believe racial inequalities grew under Kempczinski and Easterbrook said leadership has failed to address its own shortcomings.
Neal and Guster-Hines said that they raised concerns over the lack of Black executives at McDonald’s directly with Kempczinski but were ignored. According to their complaint, in an April 2019 meeting to discuss the lack of African American representation in upper management, Kempczinski “stated point blank that the ‘numbers don’t matter.'”
The executives’ complaint also highlighted the behavior of US West Zone President Charles Strong, a named defendant in the case along with Easterbrook and Kempczinski.
In 2017, Neal said she was instructed by Strong not to consult with other African American women because they were “too angry and aggressive” with “that Black-woman attitude.” Neal said that Strong later told staff and franchisees that she was “angry,” which she said hurt her standing at the company.
Kempczinski, Strong, and Easterbrook did not respond to Insider’s request for comment on the allegations. McDonald’s said in a statement to Insider the allegations in the lawsuit, specifically as they related to Kempczinski and Strong, were inaccurate.
When asked for comment on direct quotes from the lawsuit, McDonald’s said in a statement that “this reporting is demonstrative of a pattern of bias and an unchecked willingness to report falsehoods and half-truths in an effort to incite controversy.”
“Even from Business Insider, we would expect more,” McDonald’s statement continued.
McDonald’s representatives declined to provide further context or evidence to disprove the allegations in the lawsuit on the record.
Strong continued to serve as one of McDonald’s top executives in the US through 2020. McDonald’s confirmed that Strong announced his retirement in January, after more than 50 years at the company.
McDonald’s board has also come under fire for inaction around racial discrimination, as well as Easterbrook’s alleged sexual misconduct. The activist investor CtW Investment Group is calling for McDonald’s chairman, Enrique Hernandez Jr., who has been on the company’s board for 24 years, to be replaced.
“The board hasn’t been able to take decisive action,” CtW executive director Dieter Waizenegger told Insider. “Issues started to fester. They can erupt and create much larger crises further on.”
What does McDonald’s believe in?
Within McDonald’s, people remain divided on how the company should approach racial equity and social justice. Some franchisees pushed back against what they see as a needless emphasis on politics and social justice in 2020. Others feel the company is not going far enough to root out racism within the system.
Still, some are proud of what they see as McDonald’s work to create positive change.
One member of the global people team, which oversees diversity efforts, told Insider that she felt her coworkers genuinely want to do the right thing on issues such as unconscious bias, lifting up minority voices, and creating opportunities. She said the team had sharpened its focus on diversity with the hiring of Heidi Capozzi as chief people officer in April.
“Companies are like people,” Vicki Chancellor, the franchisee who leads McDonald’s Operator’s National Advertising (OPNAD) Fund, told Insider in late August when asked about the company’s approach to ethics and values more broadly.
“There may be a misstep, but you don’t judge them by that misstep,” said Chancellor, McDonald’s first Black OPNAD chair. “You judge them on how they handle the misstep. And, to me, McDonald’s is doing the right thing. And, I know that they will continue to do the right thing.”
Diversity efforts can take time to succeed, especially at a company like McDonald’s that has roughly 40,000 locations in more than 80 countries. However, Americans are increasingly demanding more from McDonald’s and other companies when it comes to racial justice.
Marcia Chatelain, a Georgetown University professor and the author of “Franchise: The Golden Arches in Black America,” said that McDonald’s and other brands assumed that tweeting “Black Lives Matter” would be enough to place them on the right side of history.
“What they probably didn’t anticipate was we are at a moment where people ask for more,” Chatelain said. “They ask for more than donations. They ask for more than diversity-pipeline programs. They ask for more than skillful marketing.
“They actually ask for racial and economic justice. And the way that McDonald’s could actually do that work is to really focus on the critical mass of workers.”
With more than 850,000 McDonald’s workers in the US alone, the company’s policies shape not only the restaurant industry but the national workforce. Miller told Insider that the company was in the midst of intentional change.
“We spent the last year listening, reflecting, and strategizing about how to better run our business,” Miller said. “We considered how, from crew to C-suite, we work as individuals and how our company interacts with the world.
“Now it is time to put thought and intention into action.”
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