Budget cuts end networking project at McDonald's

A proposed multimillion-dollar IT project that would have networked some 30,000 McDonald's restaurants around the world has been scrapped by the company's new executive team as a cost-saving move.

The Oak Brook, Ill.-based fast food company has cancelled its Innovate IT program, which was proposed in 1999 but had not yet been deployed in any restaurants, said spokesman Lisa Howard. "Tens of millions of dollars" will be saved this year by cancelling the project, as the company works to reduce short-term spending, she said. The total expected price tag for the program wasn't released.

The move comes after the hamburger chain was rattled last month by its first-ever quarterly loss and after a series of management changes that brought a new CEO, president and chief operating officer.

Former Chairman and CEO Jack M. Greenberg announced his retirement last month and was replaced Jan. 1 by Jim Cantalupo, who formerly served as vice chairman and president. Charlie Bell, the former president of McDonald's Europe, has been named as the company's new president and chief operating officer. Bell and new Corporate Vice Chairman Jim Skinner will report directly to Cantalupo.

The Innovate project was cut because it was "not going to deliver near-term benefits" as the company tries to improve its financial position, Howard said. "Our new management team is focusing on the near-term," he added. "It's just one example, one step by our new management team. They're looking at everything ... and reviewing all aspects of our business."

The Innovate project had been seen as a long-term business-efficiency initiative to integrate all of the company's 30,000 restaurants in 121 countries around the world. But the plan is now viewed as too costly compared with its expected benefits. "We have other ways to achieve [efficiency goals]," Howard said.

In October, McDonalds announced that it would restructure its business in four countries and leave markets in three other nations, while closing about 175 underperforming restaurants in 10 countries.

Some 400 to 600 jobs were also to be eliminated under the changes.

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