Previously, McDonald's was reported to be in the middle of making a big real estate decision, to spin off its real estate in form of real-estate investment trust (REIT).
According to The Wall Street Journal, talks of that decision was being propelled by dwindling sales figures and the effort to boost shareholder value. Moreover, firms favor REITs because of its potential tax benefits or advantages.
But even if McDonalds have been looking into this real estate decision for quite some time now, there are analysts who believe that the fast-food-giant is least likely to resort to REITS or spinoff its real estate holdings. One of the reasons is because McDonald's gets a huge chunk of revenue from its real estate in the form of rental income from franchisees.
It turns out the analysts may be right. According to AP, Chief Administrative Officer Pete Bensen has explained during a McDonald's investor meeting last Tuesday that the possible value and advantages that can be derived with the REIT is far less than the financial and operational risks REITs can impose to the business and the continuing evolvement.
So instead of spinning off its real estate, McDonald's Corp is now aiming for its long-term goal become 95 percent franchised. It now wants to refranchise 4,000 restaurants instead of a previous target of 3,500.
Besides making real estate decisions, McDonald's in the US has also decided to simplify its menu to improve service and order accuracy. In addition, with the aim of boosting customer view of fast food restaurant's food quality, some preparation or ingredients of its famous recipes have also been changed. For example, burgers will be seared so they are juicier. The company has also gone back to using butter and regular English muffins instead of margarine and whole grain muffins for its well-known Egg McMuffins. The company has also added new buttermilk chicken sandwich as a "healthier" offering.
