Getting Off Their Mc Butts

One year ago, McDonald's Corp. was serving a menu that consumers ranked among the worst-tasting of any restaurant chain. The Golden Arches had not launched a successful new product since Chicken McNuggets in 1983. And the company's stock was performing worse than cash sitting in a bureau drawer. Today, the food still trails the competition's, and there is still no new blockbuster on the menu--but McDonald's shares have risen 67% in the past 12 months, to $80 each, about triple the growth rate of the Standard & Poor's 500-stock index.

What do investors see? It may not be obvious at your local Mickey D's, but a behind-the-scenes transformation is under way. New Chief Executive Jack M. Greenberg is leading an overhaul of the long-insular restaurant company that has made both franchisees and investors more optimistic than they have been in years. In a break with tradition, Greenberg has turned to outsiders to fill key posts. He is cutting 23% of headquarters staff, the first layoff in company history. And franchisees and corporate managers stationed in the field now make more of the decisions about when to discount and what food to test.