Inside the chaotic aftermath of the McDonald's CEO's shocking termination and his replacement's quest to win over workers

Richard Drew/AP Photo; Samantha Lee/Business Insider

Steve Easterbrook's time as CEO of McDonald's came to a shocking end. Now, it is Chris Kempczinski's time to shine.

• McDonald's CEO Steve Easterbrook's termination as CEO following a relationship with a female coworker earlier in November sent shock waves through the massive fast-food chain.
• Easterbrook was successful, well-liked, and respected at McDonald's, making his abrupt firing even more shocking and embarrassing for the company, employees and franchisees told Business Insider.
• The ex-CEO's romantic involvement with another employee wasn't widely known internally and the identity of the woman remains a mystery, according to interviews with current and former employees.
• The next day, employees learned David Fairhurst, McDonald's head of human resources and Easterbrook's friend, was also leaving - news one employee called a "double whammy."
• McDonald's new CEO Chris Kempczinski has spent the last two weeks getting the company on board with his vision as a leader, which is strategically similar to Easterbrook's but emphasizes a renewed focus on values and ethics.
• McDonald's confirmed that Kempczinski and Easterbrook's exits were not related to each other or two other executives' departure earlier this year, but declined to comment further for this article.
• If you're a McDonald's employee or franchisee with a story to share, email ktaylor@businessinsider.com or reach out on the phone or via Signal app at +1 (646) 768-4740.
• Visit Business Insider's homepage for more stories.

When McDonald's employees heard that CEO Steve Easterbrook had been abruptly fired, a wave of shock, anger, and embarrassment rippled through the fast-food giant's corporate offices and restaurants around the world.

Easterbrook was seen by many inside the company as McDonald's savior, a charismatic Brit determined to transform the fast-food chain's villainous "Supersize Me" reputation to a "modern, progressive burger chain," a soundbite he frequently repeated over his four years leading the chain.

As CEO, Easterbrook led McDonald's through the national launch of all-day breakfast, fresh-beef quarter pounders and the acquisitions of two tech companies this year. Under his leadership, the company's market cap grew from $93.3 billion in March 2015 to $146.7 billion in November. He was respected and well-liked throughout the company.

Then on Sunday, November 3, McDonald's workers were alerted that Easterbrook was out, effective immediately. The board had investigated after learning the CEO had a relationship with a female employee, ultimately determining that Easterbrook "violated company policy and demonstrated poor judgment."

Easterbrook's romantic involvement with another employee wasn't widely known internally, and the identity of the woman remains a mystery, according to interviews with three current and former employees.

Less than 24 hours later, McDonald's employees were hit with news of another sudden departure. The company announced that its head of human resources, David Fairhurst, was leaving, effective immediately.

In conversations with ten current and former McDonald's corporate employees and franchisees, insiders repeatedly emphasized shock over Easterbrook's termination. They said they were infuriated by Easterbrook's behavior and that ultimately they trusted the board's decision to terminate the CEO.

Meanwhile, Chris Kempczinski has spent the last two weeks launching a quest to win over McDonald's massive system. And, the new CEO is succeeding - despite previous bad blood with franchises.

Shock, embarrassment, and anger

Getty Images

McDonald's former CEO Steve Easterbrook.

Nearly every McDonald's insider who spoke with Business Insider, from franchisees to corporate employees, mentioned shock as their first reaction to Easterbrook's abrupt departure.

Easterbrook was generally well-liked and well-respected, according to past and current employees. Various people described him as smart and strategic, with a dry, British sense of humor.

Discussion of Easterbrook's past relationship with Denise Paleothodoros, who previously worked on McDonald's account at public relations firm Golin, served as water-cooler gossip at McDonald's, according to multiple sources. As reported by the The Wall Street Journal, the relationship with Paleothodoros was reviewed and permitted by the board following an investigation several years ago, due in part to assurances that she would no longer work on the McDonald's account.

The idea that the CEO would engage in what The Journal reports the board found to be a short-term, consensual relationship with a subordinate at the company was widely seen as unexpected and unacceptable.

"I was shocked," said one long-time franchisee. "Mainly because in today's world, you don't anticipate that type of behavior."

One corporate employee said he was surprised by Easterbrook's "lack of judgment," expressing amazement that the executive could be "so smart and so stupid at the same time."

The same employee said he and others felt embarrassed and angry in the aftermath of Easterbrook's departure, saying the incident felt like a black eye on the company's reputation. Financially, it placed employees, franchisees, and shareholders in a dicey position, with McDonald's losing $4 billion in value after the news broke.

Adding to the discomfort was activists' use of the incident to highlight issues facing workers at the restaurant level. Fight for $15, a labor group fighting for higher minimum wages, swiftly released a statement following Easterbrook's firing that called McDonald's culture "rotten from top to bottom." On November 12, the American Civil Liberties Union and a Michigan McDonald's worker filed a class-action lawsuit over claims that McDonald's has failed to address a "systemic problem" of harassment, connecting the worker's claims of sexual harassment to Easterbrook's behavior.

This is precisely what some franchisees had feared might happen in response to Easterbrook's firing.

"The hypersensitive and opportunistic world we live in could result in the groups that have higher mandatory wage and QSR organizing objectives for their own selfish reasons have already started to use the news to advance their objectives," McDonald's National Owners Association (NOA), an independent organization of franchisees, wrote in an internal report seen by Business Insider.

Current and former McDonald's corporate staffers said that the identity of the woman with whom Easterbrook was involved remains unknown internally. Unsurprisingly, the mystery has sparked rumors. The discussion around the employee's identity has been a hot topic of conversation among various McDonald's insiders, according to multiple sources.

The 'double-whammy' of a second exit in a year full of departures

Budrul Chukrut/SOPA Images/LightRocket via Getty Images

Four top McDonald's executives have left so far in 2019.

McDonald's employees were still reeling from Easterbrook's departure when they learned less than 24 hours later that David Fairhurst, McDonald's head of human resources, would also be leaving.

Like Easterbrook, Fairhurst was a long-time McDonald's employee who got his start in the UK. Fairhurst was promoted to the role of chief people officer in 2015, six months after Easterbrook became CEO. Sources said the two were friends and worked closely at McDonald's. Fairhurst said in April that he was "heavily involved with the CEO."

One corporate employee described the back-to-back loss of Easterbrook and Fairhurst as a "double whammy."

Despite the abrupt nature of Fairhurst's departure and his closeness with Easterbrook, a representative for McDonald's said the two were unrelated and declined to provide further details. Fairhurst wrote in a LinkedIn post on Monday, November 4, that he had "decided the time has come for me to move on to my next career challenge."

"My parting wish is that each of them remain true to the values which have taken us so far on our journey," the post reads. "That their customer obsession never wavers. That their commitment to maintaining McDonald's position as a global leader never dims. And that, above all, their belief that they are always better and stronger when they act together remains absolute."

Fairhurst and Easterbrook's exits were also concerning for some employees because they represented the latest in the number of senior-level departures at the company. The company said in July that chief marketing officer Silvia Lagnado planned to leave her post in October. In September, McDonald's said its chief communications officer, Robert Gibbs, would also exit the company in October.

Three current and former corporate employees said that, to the best of their knowledge, the departures were not directly connected or rooted in a common cause. While the departures of Easterbrook and Fairhurst were sudden, Gibbs and Lagnados were previously announced.

Despite the lack of a unifying narrative around the exits, one corporate staffer said that the number of departures did worry him - especially since there was no obvious financial reason for people to jump ship.

McDonald's confirmed that the four departures were all unrelated to each other. The company declined to offer further comment for this article.

The new CEO's quest to win over McDonald's

Richa Naidu/Reuters

McDonald's Chris Kempczinski speaks about fresh beef expansion in 2018, as head of the chain's US business.

With the shock of Easterbrook's termination and some anxiety around the number of departures this year, Chris Kempczinski has his work cut out for him as McDonald's new CEO. And, by all reports, he has embraced the challenge.

Employees were happy that the company did not attempt to bring someone in from the outside, according to a corporate employee, instead promoting Kempczinski from his role as the head of the US business. McDonald's unique culture and understanding of how the corporate office and franchisees interact is crucial to the company's success. This can create issues for newcomers, according to multiple sources.

Kempczinski, who joined McDonald's in 2015, had previously clashed with franchisees while leading the company's US business, with franchise owners bristling against expensive initiatives like a remodeling program that could cost up to $750,000 per location.

When the news broke of Easterbrook's departure, Kempczinski quickly set to work reassuring franchisees and employees. The core of his messaging has been that McDonald's won't change course strategically, but that misconduct of any kind will not be allowed under his leadership.

Soon after the news broke on Sunday, Kempczinski called Larry Tripplett, a leader of two influential franchisee groups as CEO of the National Black McDonald's Operators Association and an NOA board member, to discuss financials and African-American franchisees' on-going concerns. By Monday morning, a video starring Kempczinski was sent to franchisee summits around the country, presenting a narrative and financial expectations that helped franchisees get on board with the new CEO, despite past tension.

The Wednesday following his promotion, Kempczinski held a town hall in the company's Chicago headquarters that was streamed to McDonald's employees around the world. In the town hall, Kempczinski talked about his personal background - including that has had been married for 25 years and met his wife college - and answered questions about the future of the company.

Strategically, Kempczinski emphasized that McDonald's will continue to work on the velocity of its growth plan. However, he and chairman Rick Hernandez Jr. also alluded to the need for a renewal of ethics and trust in the company.

"The mission I'm asking you to re-enlist in is to make this company an example for the world and to do the right thing each and every day," Kempczinski told employees, according to a McDonald's employee who attended the town hall.

According to another McDonald's employee, Kempczinski emphasized that he had respect for everyone on his team. Further, Kempczinski said that he would not have anyone on his team who didn't share his values.

Kempczinski's language and Hernandez Jr.'s discussion of the McDonald's policies on relationships between employees were seen by this employee as an allusion to Easterbrook and Fairhurst's recent departures.

The town hall and Kempczinski's efforts to win over those within McDonald's system is producing positive results in their early stages. McDonald's stock has recovered from its fall in the aftermath of Easterbrook's termination, with shares trading at $194.57 when the market opened on Friday.

Two weeks out, multiple employees and franchisees said that even though the details of Easterbrook's relationship remain a mystery, they agree with the board's decision to terminate the CEO.

"I think that folks trust the board," said one former corporate employee who left McDonald's earlier this year. If board members determined Easterbrook's relationship was grounds for termination, "there must have been something that was driving it."

Hayley Peterson contributed reporting for this piece.

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