McDonald's to Sell Up to 21% of Outlets to Franchisees

McDonald's, the world's largest fast-food chain, said on Tuesday it would sell up to 21 percent of its company-owned restaurants to franchisees over the next three years or more.


The announcement comes as McDonald's has been working to reduce its restaurant ownership so it can funnel more resources into fast-growing markets such as China, Russia and India.

Most of the 1,000 to 1,500 restaurants will be sold to current franchisees, Chief Operating Officer Ralph Alvarez said during a meeting with financial analysts at McDonald's Oak Brook, Ill., headquarters that was broadcast on the Internet.

As of Sept. 30, about 7,000 of McDonald's more than 31,000 hamburger restaurants were company owned.

McDonald's shares were down less than 1 percent Tuesday.

McDonald's executives said the up to 1,500 restaurants marked for sale are in addition to the company's move to sell thousands of other restaurants to developmental licensees, or franchisees that control an entire market. McDonald's sold about 1,600 restaurants in Latin America and the Caribbean earlier this year to a developmental licensee.

McDonald's executives declined to specify where the company was seeking to sell the restaurants but said all of its major markets would likely see some reduction in company-owned stores.

In the past, McDonald's has said that Canada and the United Kingdom are two markets where it was seeking to reduce its restaurant ownership.

Meanwhile, McDonald's is pouring more resources into expansion in China, Russia and India. It plans to open 125 restaurants in China next year, with 35 to 40 new outlets planned for Russia. Chief Financial Officer Matt Paull said that on a per-restaurant basis, Russia is the company's most profitable market.

McDonald's also said its controller, Peter Bensen, would become CFO on Jan. 1. Bensen, 45, will replace Paull, who in July announced plans to leave the company.

McDonald's shares were down 4 cents at $57 in afternoon trade Tuesday on the New York Stock Exchange.