McDonald's to Take $235 Million Charge Tied to Refranchising

McDonald’s Corp. is booking a $  235 million charge related to its planned sale of 4,000 restaurants to franchisees and some costs tied to relocating its headquarters to downtown Chicago. ENLARGE
McDonald’s Corp. is booking a $ 235 million charge related to its planned sale of 4,000 restaurants to franchisees and some costs tied to relocating its headquarters to downtown Chicago. Photo: Zuma Press

McDonald’s Corp. MCD 0.24 % 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 [email protected]


WSJ.com: US Business

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