Five key takeaways:

  • The “chief impact officer” role was created to streamline government relations, communications, philanthropy and sustainability, community engagement—moving with more speed and delivering greater accountability.
  • The company was able to respond quicky to the E.coli crisis precisely because it was not siloed, and functions like government relations and communications were able to work together.
  • The connection and collaboration with the head of supply chain began long before the crisis, and was critical to the company’s crisis response.
  • When crisis strikes a brand like McDonald’s “we have to address the emotions, not just the facts.”
  • “We were promoting the power of diversity in our employee ranks, in our franchisee body, in our suppliers, well before the acronym was coined. And I believe that our leadership in that will continue well after any announcement that we made.”
  • McDonald's needs to attend to many, many, many people of different ideologies and different beliefs, so the company “does terribly in the culture wars.”

Paul Holmes: Michael Gonda is the chief impact officer at McDonald’s and he has very kindly agreed to sit here with me and discuss the last 12 months at McDonald's, which I think it's fair to say were pretty eventful. I want to start by talking a little bit about your role. Your title is chief impact officer. What does that mean?

Michael Gonda: I'm still trying to figure that out, too, so maybe we can sort it out together. It feels very much like a title for now. We started an impact function about three years ago and the recognition was that government relations, communications, philanthropy and sustainability, community engagement, those were spread out across the company.

An example of what happened is our Archways to Opportunity Scholarship Program. We wanted to make sure the world knew about that. We wanted to make sure the program was staying modern and meeting the needs of young people today, that there was one team that could go and tell that story. And the reality is we were spread out across like four or five different departments. And that made it hard for our CEO and then our business leaders to find a single point of accountability.

So we formed the impact team. I'm about three years into my role, and I think last year was testament to this, it's worked pretty well. It's enabled us to work with more precision and more speed than we previously did.

PH: And what's the relationship between the impact function and the communications function? Obviously, there are areas of overlap and convergence.

MG: When we first started, there was a sense of why are we all in the tent together? For those who started in government relations, they saw themselves as hardened professionals who were lobbyists by trade. Why am I in a weekly meeting with communications? So different disciplines may not always see themselves working together.

An insight early on when I started, when I asked the GR team, what do you do for the brand? What is your contribution to the business? “Well, the first half of the year, we're in session and we are trying to identify opportunities or threats to the brand. And the rest of the year, we are building a reputation.”

Great. Did you know that next week we're launching a national campaign that is all about being a crew person at McDonald's? We call it One in Eight, because one in eight Americans have worked at McDonald's. And the answer was no. I was like, isn't that annoying? I mean, your job is to drive reputation for this company, and you have no idea that this suite of tools could be at your disposal? And I think as we found more and more examples like that, there has been a much closer collaboration across disciplines that started by saying, why are we all in the room together? Why are we doing annual plan together?

PH: It does make me wonder how many companies haven't figured out sort of how to bring those disciplines together for maximum effect. But I think maybe the better way to understand what it is that you do and what it is you bring to the company is for us to talk about some of the events from last year at McDonald's, because it felt like from the beginning of the year to the end, your name was being caught up in or associated with a whole plethora of important political, social, economic issues, which is inevitable when you're as ubiquitous as McDonald's obviously is.

Inflation, and the "$18 Big Mac"

I wanted to start at the beginning of the year, and inflation, and the fact that McDonald’s has always been associated with affordable dining, so it was becoming an issue for you. So tell me a little bit about how that issue started to affect the company and how you formulated a response.

MG: Early in the year, it became clear that we were starting to lose a really important cohort that makes up about 20 to 30% of our daily visits, individuals from households that have income of $45,000 or less. The challenge that cohort was dealing with, not exclusive to them, but the pain they were facing was acutely present and visible with that cohort, and they stopped showing up. It was clear to us that our pricing was a barrier to getting people into our restaurants.

Now we're a franchise brand, 95% of McDonald's restaurants are not owned by the corporation. That means we don't set prices. We can recommend prices as part of national advertising, but we can't say everyone around the world or everyone around the country should sell chicken nuggets for this one price. So when you're seeing data that says a really important cohort is not showing up, the first thing you have to do is to convince your operators, in this case our franchisees, that we needed to launch a national program, a value menu, and we called it a $5 Meal Deal.

Now, we knew that probably in like January, February. But that meal didn't become available to Americans until May. And in that time, you started to see headlines about people not having money to go out. You saw headlines about an $18 Big Mac. But we knew this program was going to launch.

The second thing is we had to correct some misinformation. We became a bit of a political football. Anyone on the left that wanted to find an example of corporate greed would say, there's your $18 Big Mac, discount the fact that that was coming from a franchise restaurant in a singular location so not necessarily representative of national prices. On the right, this was all the failures of Bidenomics manifesting. We knew this program was going to launch, but faith and trust in the brand was just slowly eroding and coverage was getting worse and worse.

PH: Can I ask you a quick sort of interruption question? How do you measure faith and trust in the brand, and is it close enough to real time that you can make decisions?

MG: It depends. We're going to get to E. coli in a moment. You could see degradation in sales and degradation in trust, and volume of coverage, and there's a really clear line across all of them. This was probably less of a clear correlation. It wasn't like on one day something happened or the day of a headline about Big Macs and all of a sudden people stopped coming out. So you had to try to pick different pieces of data to put the story together.

And what we ultimately decided is we were going to get more front-footed about the myths and the facts about our pricing strategy. The president from McDonald's USA authored a letter that said we hear you. Prices have gotten out of control and we are going to do something about it. We went point by point on the misinformation we were seeing.

I was interested to see many people in our industry say that is a terrible idea. It's defensive, it's picking a fight. I disagree. I think when you know you're about to do something, it's really important to clarify the misinformation and say something clearly and succinctly. And we wanted to take some of the anxiety out of the conversation, and I think it actually helped consumers who were worried, even if the $18 Big Mac isn't showing up in my local store, is it coming next week?

We were able to say that that was not the case. In fact, a $5 meal deal is coming next week.

The Candidates Both Worked at McDonald's?

PH: That was, from my perspective, the first of many times that I saw McDonald's in the headlines associated with, tangential to a crisis that was clearly an American crisis. The next incident that registered with me was the controversy that sprang up around Kamala Harris's resume and the fact that McDonald's hadn't been on there, but then she mentioned that she'd worked in McDonald's in her youth.

Now,  full disclosure, my first job was as a busboy in a pub in Lancaster, England, and I have never once mentioned that on a resume or a job application. But in this case, it became a source of controversy. There was an accusation that it was fabricated. There didn't seem to be any proof one way or another. And again, McDonald's was dragged into the story.

MG: So I mentioned that a source of real pride for us it that one in eight Americans have worked at McDonald's. So then when you see and hear the vice president of the United States talking with pride about her experience and what that enabled her to go on and do and the confidence that gave her. For many of us in the building and I think across the country, we felt pride.

As practitioners, as communicators, we felt excited because we were trying to get that story out there for a while.

Now, we also serve 90% of the population every year and it's no secret to anyone here that we live in a very polarized environment. So if we are seen as picking any side, we know that we are very likely going to be offending a significant number of our customers. I think that makes our brand a little bit different. I've worked in other brands where we took much clearer and more specific political views because of who our customers were and what they wanted to see from the brand.

McDonald's is different. And McDonald's needs to attend to many, many, many people of different ideologies and different beliefs. I got inundated with emails with different suggestions and ways we could capitalize on the vice president's inclusion and none of that felt authentic or right for the brand.

It was something that was part of her story and we didn't want to step in and we also didn't have the ability, which we ultimately said, to get into the question of whether the vice president worked there or not, just because of how long ago that was and I don't know if you have colleagues at your pub, do they still remember you?

PH: I don't really remember any of them.

MG: I worked at a liquor store at my college and I don't think any of my colleagues can attest to that. So that was something that we just wrestled with and we knew that by saying something we could have easily been seen to be trying to wade in and we just didn't want to get anywhere near that.

Our brand is a great brand. But it does terribly in the culture wars and this became a bit of a culture war.

PH: That leads to the next thing that I wanted to talk about because despite not wanting to get dragged into it you did eventually because one of your franchisees decided to invite Donald Trump to flip burgers for a photo op, which was clearly designed to troll Harris. How did that happen and how do you deal generally with those issues that you may have a corporate position that is strictly neutral, but you have thousands of franchisees around the country, some of whom presumably have very strong opinions one way or another, and have the latitude to act on those decisions?

MG: From April-ish to October, we did have a playbook and we shared it with all of our franchisees. It was nine specific points about keeping the brand safe in an election cycle. And part of that was not hosting political activity in a restaurant, because back to this point, if we serve 90% of the population. We are not a political brand. Political engagements in our restaurants just don't work well for us. It could be counterproductive.

We do regularly welcome and invite elected leaders to our restaurants. And that's really important, because we want people to know and see and understand what it means to run a McDonald's restaurant, what it means to work in a McDonald's restaurant, what it means to frequent a McDonald's restaurant. So opening our doors to everyone is important, it's a core value of ours.

There was a playbook, probably not relevant for this situation. We got a call the week before this visit letting us know that a franchisee had been approached by local law enforcement asking for the president to be able to come and visit. And as anyone can imagine, you kind of get these things through like a text message or an email. You're like, wait, are we talking about visiting a specific location in Pennsylvania? It's like, yeah, we think so.

Closing our door to an elected leader or presidential candidate for a major party, that felt like the wrong thing to do when we have been clear about allowing elected leaders previously to come into our restaurants. And we'd have to start explaining why we were adjudicating on this specific instance. So we're going to support the franchisee in facilitating this visit.

The question then becomes, how do you do it? And how do you explain to people what's going on? We decided that we were not going to talk a lot in advance. It got out, the location of the restaurant on Wednesday. The visit was on Sunday. It was Wednesday, Thursday, Friday, Saturday, Sunday, five longest days of my life, as we're trying to figure out just all of the different movements and steps that would that this would entail.

The one thing that was really important to me is that when we spoke we spoke clearly and decisively about why we did this or why this happened and what it means for the brand, which is that McDonald's is deeply important to two very important people. And to make clear to our employees and other stakeholders that this was not a political event that we had gone and secured, but a decision made by an independent business owner.

The reception to the line that we are not red, not blue, but golden, blew me away. I think that chord was people wanting to see the brand try to rise above the political fray. So I hope we did it in this situation, but it was definitely a tightrope.

PH: It does speak to the difficulty, if not impossibility, of staying out of politics, though. The needle is so fine. Threading it is a big challenge.

MG: I totally agree. I think it would have definitely been seen as a political statement had we tried to stop it. We also made sure that the Harris campaign knew that our franchisees were eager to have the vice president at our restaurants as well. I think it is hard to be neutral. You have to work really hard at trying to be even handed. That was certainly what we worked on.

E. coli and the New Crisis Playbook

PH: That leads us right up to the E. coli crisis. Last year set a record for the number and severity of food recalls across the US and this was perhaps the most high profile, not because it was the most serious necessarily, but because it was McDonald's.

Tell me a little bit about how that crisis came onto your radar and how quickly and assertively you were able to respond to it. Because when I talked to people for our crisis review earlier this year, there was a feeling that you'd sort of not only followed the playbook, but updated it for a real-time social media age.

MG: It’s humbling to hear that. It was the minute we landed in Vegas for a franchisee meeting that it was clear that there was a food safety incident, and when you work at a restaurant company or any food company that is the number one fear you have every day. It's emotional for people who work at the company, it's personal, and it becomes scary. You're hearing reports of hospitalizations and illness.

I want to go back to the first question you asked about impact, because I think our ability to respond had a lot to do with how we were organized. We weren't siloed across GR, across communications, we were able to really work together and together right at the beginning. That became very important.

The second thing is our leadership team had spent a lot of time in the two years before that on developing trust amongst the various different parties. So my connection and collaboration with our head of supply chain didn't have to begin on the 21st of October. If it did, I think we would have been toast. Similarly with the head of the US business, there was trust and he understood and knew the role that each of us could play.

So there was a lot of work that went in to us being able to respond effectively as a whole company, as a system.

We got the call from CDC. The way this works is they say we're picking up “signals” and they're getting clusters. Those signals are reports of a specific type of illness and then in a specific geography. And they start interviewing people and saying what have you eaten? And the first few, that list is really long. Then they start to get like four or five common foods and the question is have you had a quarter pounder? And they called us and said, we're confident that there is enough connections here that you need to take action.

What I'm proud of is that there was no debate in the company about whether we should just look at one ingredient and try to contain this. We ended up pulling proactively the quarter pounder in the affected area. I think we went above and beyond right out of the gate. That was so important to maintaining trust with CDC and other health authorities.

PH: Just to kind of circle back to one of the themes of this discussion, management was able to unite around the company's values and principles that you had discussed in the past. What about franchisees? Was there any pushback or reluctance in the franchisee community?

MG: Short answer, no. But the approach needed to be discussed. And we were in a meeting with a thousand franchisees in Las Vegas as this was all happening. So me, the head of our supply chain, the US president, went on stage and said, all right, you're about to get notification in the next few minutes that we'll be recalling quarter pounders in about 900 restaurants.

And what we all aligned on, company and franchisees, are three phases to managing this. I'll be honest with you, we made them up right on the spot. Phase one was rapid response, and that was we were going to do everything we could to demonstrate to public health authorities that our singular focus was on public health. The second phase would be around resumption of selling the product. And the third phase would be repairing any reputational impact.

What we were concerned about, is people might start confusing what phase we were in. If we started in phase one by saying we're the safest food brand in the world, we have never had a food safety incident, that would be a lot like an airline saying right after an incident, this is the first time this happened.

So we wanted to really own it and take responsibility in phase one and not try to be defensive.

Phase two, we would get product back on, and phase three, we would start to rebuild and regain trust that we definitely lost as a result of this food safety incident. So I think the debate with the franchisees was just explaining to them that we would go out and tell our story, but we weren't going to do that in the initial response.

PH: It must be difficult to have patience. We've talked about this now twice, that you know what your plan is, you have a strategy, just as the $5 deal evolved, But in what is a spectacularly real-time crisis, in which people start to second guess companies 10 minutes into an event rather than 10 days or 10 weeks, it must be incredibly difficult to have that discipline and to hold the line as a crisis is evolving?

MG: I mean, one of the best parts of my job is the fact that I work at a franchise business because I get to interact with small business owners all across the country. That said, when something like this happens, it's personal. It is their personal livelihood this is impacting. So it adds a different level of emotion. And it's on us, it's on me to be able to address that reality, make sure that people know that I am acutely aware of what they are going through, and that we've got a plan that can get them through it.

I mean, there's crisis playbook. I've developed them in my time with agencies for other companies, and they're helpful, but every situation is unique to the time that you're in, the environment you're in, the brand that you're working for. And we had to take a very contemporary approach to trying to get our story out there as quickly as we could.

PH: The other thing that impressed me was how fast, articulate, and on message the non-communications people involved in this were. The two voices that stood out were your head of supply chain and your North American CEO, who were recording videos, providing updates, speaking with both empathy and authority. How much of that was something that you had prepared for and how much of it was just two people in the leadership team really rising to the challenge?

MG: I think there's an intuitive sense for everyone at the company that our brand holds a very special place, not to be too reverent about it, but it is an important brand. So when something happens that is disruptive, disappointing, we have to address the emotions, not just the facts.

And that gets done through individuals getting in front of a camera, saying, one, that we own it; two, that it's safe, that we know that we've gotten all contaminated product out of our supply chain, and three, we are going to work with every single person in public health authorities, the federal level, the state level, to make sure that this can't happen again.

I think you need someone, a voice to convey that. So that didn't take a lot of too much hand wringing to select Joe Erlinger, president of our US business, and Cesar Pena, our head of supply chain, to take the lead. It wasn't like, what do you mean we need to go do this? It was more like, OK, when? And the when began immediately. We flew back to Chicago from Vegas and Joe was on the Today Show within about six hours.

PH: Again, from my perspective as an outsider, the turnaround from there's a recall to we're confident that we can bring this product back was really short. Did that create its own challenge that people would say, well, that got fixed suspiciously quickly. How did you deal with bringing the product back?

MG: We tried to bring reporters along on the journey with us. The first day we held a briefing call, and we had like 300 people join the call. And we did that four times throughout the first week. What we tried to explain to them was one, we don't think this is about any sort of lapse in cooking procedures, otherwise you would have seen a much more widespread problem. We knew it was pretty contained, and we tried to really explain that to reporters and make sure they understood, along with health officials, why we were confident that we'd isolated it.

By the time we got to resumption, they weren't questioning whether that was prudent or putting profit over people.

Customers, we needed to make sure that when they walked into a restaurant and they had a question, they got answers to it. And that's really hard to do when you're working with, about 800,000 people in the country who wear a McDonald's uniform. To train 800,000 people on messages is hard.

PH: Let me ask you a question about that, because you talk about reporters, and I wonder the extent to which the media landscape that you deal with in a crisis has changed. So in times of crisis, is it in fact still the mainstream legacy media that have the biggest impact on trust and credibility? Or did you also involve  alternative media, independent media, even influences in that process?

MG: I think it's an and, so it wasn't one over the other, but when you're dealing with food safety issues, I think reporters, traditional media, still carry a lot of weight and water. What we talked about in the company, is we need to see them as performing a public service. We had franchisees ask us what they should do when reporters come to their restaurants and set up live shots. And our answer was, thank them and offer them coffee. They're there to try to educate the public on what is safe and what is not.

I think this is true for other industries, aviation and others, traditional media is very important. It's not to diminish alternative media and influencers, but I don't think I'm fully there yet to say you don't need to prioritize traditional media.

Recalibrating DEI for a New Era

PH: The final crisis or inflection point I wanted to talk about was the DEI issue and I think it's fair to say that given the number of or the percentage of African-American consumers who come into McDonald's every day, a lot of people were shocked when the announcement was made that you were abandoning your diversity and equity goals. So tell me a little bit about that decision and how you came to it.

MG: I think there's some really important nuance in what we did and what we didn't do. And I think some of that nuance, it gets lost when it's reported.

It became clear that some programs, like aspirational goals, were going to fall victim to legal scrutiny—separate public scrutiny for a second—if they weren't modified. And we made the decision as a company that we would look to remove the smallest parts of the most questionable programs—aspirational goals—while still preserving the totality of our work on inclusion.

We're a brand that is 70 years old now. We were promoting the power of diversity in our employee ranks, in our franchisee body, in our suppliers, well before the acronym was coined. And I believe that our leadership in that will continue well after any announcement that we made.

What got lost to me, and I'm not saying this to complain at all, is what stays in place at McDonald's. Because I think there are some companies that have taken a much more aggressive, kind of hatchet approach to their DEI work, and that was not us. I would show you a fact sheet if I could project it that showed everything that was in place that is remaining today. And it's like 95% of the work.

That didn't get articulated well. I think we can take responsibility for that. I don't blame the media, but I think that the nuance just didn't come through there.

The next week we were faced with a lawsuit for a scholarship program that's been in place for that 40 years that promotes individuals whose parents identify as Latino and this program is given $33 million in its time. I mean, there are many, many people in the country who have gone to college purely because it exists.

We got sued for that, and we had a fork in the road decision. Do we go and challenge that in court with an unlikely chance of success? We could, though that would mean there's a temporary restraining order in place. Anyone that had applied and was hoping to get those scholarships to go to school this coming fall, they would not get them. And likely, no one would get them next year or the year after that. Or do we look to adjust and modify that program?

The adjustment we made enabled the program to continue. And I think that's true when you look at McDonald's inclusion work. We removed aspirational goals because we thought that would definitely fall victim to legal scrutiny, but we're continuing so much of the work. And we're not looking for credit, we're just looking for the operational flexibility to keep doing that work.

PH: So DEI exists because the prior situation was clearly discriminatory. How do you, without aspirational goals, without some sort of metrics, how do you avoid a return to good old-fashioned racism?

MG: I think when you look at the progress that this company has made over 70 years, a lot of that happened without aspirational goals. So I can't speak for every company, but the argument you made, I don't know that necessarily would apply to McDonald's.

And the second piece, the force of gravity, is accountability. We have committed to continue to be transparent and to continue to report demographic data across our franchisees, across our supplier spend, across our employees. If you, if our employees, start to see massive declines in those numbers, I think that will be a pretty strong driver of accountability.

Many companies are not continuing to report that data. We've articulated and communicated that we will continue to do so.

PH: Well that was a really fascinating journey. I can't believe all that was in 12 months. We didn't even get to what I thought was the most exciting thing, which was Grimace showing up at New York Mets games and helping my team make the playoffs for the first time in like 20 years. Thank you, Michael.