McDonald's to Take $235 Million Charge Tied to Refranchising
July 07 2016 - 6:30PM
Dow Jones News
McDonald's Corp. said it would book more than $200 million in
charges in the June quarter related to its planned sale of 4,000
restaurants to franchisees by 2018, the company said Thursday.
The $235 million charge, which also includes some costs tied to
relocating its headquarters to downtown Chicago, would lower profit
by about 20 cents a share, the company said.
The fast-food chain, which had outlined the plans last year as
part of a financial push intended to appeal to investors, has
targeted $500 million in general and administrative savings, mostly
to be realized by the end of 2017.
The Illinois-based company had said that after the sales, 93% of
its locations would be owned by franchisees. The company ultimately
wants to increase that number to 95%.
Investors generally like the move toward more franchised
locations because it gives companies a more stable cash flow from
royalties, licensing and property leases and tend to have a higher
profit margin while avoiding the ups and downs of labor and
commodity costs.
McDonald's is slated to report second-quarter results July 26.
Shares of the company were inactive after hours and closed up 0.2%
to $120.92 Thursday.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
July 07, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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