McDonald’s meaty plan
McDonald’s have released plans to beef up its returns to shareholders by at least 10 per cent by refranchising at least 1,500 restaurants.
McDonald’s aim to return $18 billion to $20 billion to shareholders through share repurchases and dividends between 2014 and 2016. The international burger maker returned $16.4 billion to shareholders from 2011 through to 2013.
Having a higher level of franchised restaurants should, according to Robert W.Baird & Co’s analyst David Tarantino, “result in an even more stable and less assest-intense business model.” Currently, more than 80 per cent of the company’s restaurants are franchised, including 71 per cent in APMEA, Asia Pacific, Middle East and Africa, 73 per cent in Europe and 89 per cent in the United States.
The large number of restaurants it aims to refranchise represents a more than 50 percent jump in refranchising activity from the prior three years. Refranchising more locations would allow McDonald’s to focus on running fewer restaurants, while still collecting royalties from the franchised locations.