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New McDonald's CEO faces many problems: Experts

Source: McDonald's

If McDonald's (MCD) incoming CEO wants to turn around the company's stagnant U.S. business, he must deal with its "total brand confusion," Yale management professor Jeff Sonnenfeld told CNBC on Thursday.

"The quality of the food, the price confusion-are they going to be the place where you go for value meals or dollar meals or are they trying to upgrade it?" Sonnenfeld said in a "Squawk Box" interview.

Chief Executive Don Thompson will retire at age 51 on March 1, and Steve Easterbrook, the restaurant chain's senior vice president and chief brand officer, will take the company's top position, McDonald's said Wednesday.

Read More McDonald's CEO Don Thompson steps aside, stock jumps Shares of McDonald's were up 3 percent in premarket trading Thursday. Sonnenfeld said Easterbrook is a "fantastic choice" to head McDonald's because he turned around the chain's Europe business and reshaped its brand image in the U.K. As a proven implementer and a leader with ideas, Easterbrook "can make a big difference," he said. Easterbrook joined McDonald's in his native Britain in 1993. He became president of McDonald's Europe and led the chain's "efforts to elevate its marketing, advance menu innovation and create an infrastructure for its digital initiatives," McDonald's said in a release.Read More Who is McDonald's new British CEO? Sonnenfeld noted that McDonald's has gone through five CEOs since 1999, two of whom the company lost to sudden death. "They really haven't had the plan they had in mind roll out, but at least they've had the bench strength," he said. McDonald's franchisees are optimistic about Easterbrook, RJ Hottovy, Morningstar's global director of consumer equity research, told CNBC. They feel that the chief brand executive has had good ideas, such as focusing on advanced metrics like customer engagement, that have not been acted upon.

The company needs to reinvigorate those franchisees, who are turned off by McDonald's current strategy, said Bill George, professor of management practice at Harvard Business School. In addition to replacing the CEO, McDonald's should also shake up its leadership with a mix of insiders and outsiders, he said. While some experts told CNBC they credited the board of directors for acting quickly to replace Thompson, Richard Clayton, research director at CtW Investment Group, called the board a strategic weakness. He said its members need a greater diversity of backgrounds, including a background in the franchise business.

Read More Cramer: McDonald's franchises 'had enough' "The company's difficulty in responding to its changed competitive environment, particularly the difficulty it's had attracting millennials, reflects this lack of diversity on this board," he told "Squawk Box." McDonald's should take a more regional approach to menu offerings under Easterbrook, Hottovy said. "I think one of the missteps the company has had this year is trying a one-size-fits-all approach, where you have the products that are rolled out nationwide," Hottovy told "Squawk Box." "I think they need to look at the local demand, the different preferences, taste preferences, different demographics in each market and start to come out with more localized product decisions and localized marketing decisions, as well." In fiscal year 2014, global comparable sales growth, a key restaurant industry metric, dropped one percent, and its U.S. unit delivered a 2.1 percent decrease in comps.

Read More Are McDonald's eggs real? Fast food giant cracks mystery McDonald's must maintain some uniformity across the United States because a broad menu gives it bargaining power with suppliers and helps it achieve economies of scale.

But the burger chain can allow for roughly a quarter of the menu to be reserved for specialty items offered in different regions, Hottovy said. He noted that the company has 22 operating regions across the United States. "That's a starting point to get people back, interested in the story and certainly attract a wider audience." By offering regional menu items, McDonald's can also make its supply chain more nimble and bring products to market faster, he said. Introducing new items on a national level in a company as big as McDonald's is like turning around the Titanic, he added.

Read More What are McDonald's fries really made of? Sonnenfeld disagrees with Hottovy about how McDonald's should manage its menu.

"Having it your way was always the frustration. They're trying to bring in more variety but that slows up the operations and delivery systems," he said. George said the key for McDonald's is to retain its core customers while also offering more healthful options to attract millennials, who are abandoning the Golden Arches for the likes of fast casual chain Chipotle Mexican Grill (CMG).

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