McDonald's to Refranchise 1,500 Restaurants
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McDonald's has a plan to boost its slipping profits: refranchising.
The burger chain announced Wednesday plans to sell at least 1,500 company-owned restaurants to franchisees by the end of 2016. The restaurants affected will be primarily outside the United States, in the Asia/Pacific region, the Middle East, Africa and Europe.
The refranchising boost will reflect a more than 50 percent increase in refranchising activity compared with McDonald's prior three-year period.
Currently, over 80 percent of McDonald's restaurants worldwide are franchised. However, international franchise activity lags behind the U.S. Refranchising 1,500 of the over 14,800 international McDonald's will represent a huge jump in this effort.
McDonald's has struggled recently to keep up with the competition. In April, the chain announced that first quarter profits came in at $1.2 billion – a 5.2 percent drop from 2013, and short of analysts' predictions.
Refranchising is a common way for franchises to boost net income. Earlier this year, Burger King finished a refranchising push that resulted in a 99 percent growth in income in 2013. Wendy's is also in the process of reducing corporate stores, in a refranchising effort that spans 415 restaurants.