McDonald’s Decides Against REIT Plan as It Pursues Cost Cuts

By Publications Checkout
McDonald’s Decides Against REIT Plan as It Pursues Cost Cuts

McDonald’s, the world’s largest restaurant chain, has decided not to create a real estate investment trust, a proposal touted by some investors as a way to unlock value from its massive property holdings. Instead, it’s escalating cost-cutting efforts and returning more money to shareholders.

The company gave the idea of a REIT “serious consideration” but is focused instead on its current turnaround plan, Chief Executive Officer Steve Easterbrook told investors at a meeting in New York on Tuesday. The company also is raising its quarterly dividend by five per cent to 89 cents a share.

Easterbrook, who assumed the CEO role in March, has been working to pull the fast-food chain out a prolonged sales slump. The 48-year-old executive, who previously announced plans to cut costs and return more cash to shareholders, now expects to reduce overhead expenses by $500 million a year. His comeback effort got a boost last month when McDonald’s announced a gain in U.S. sales after seven consecutive quarters of declines.

“We don’t believe it serves the best interests of shareholders to pursue a REIT,” Easterbrook said during the meeting. “The potential upside is not compelling, and the future value at risk too great.”

News by Bloomberg, edited by Hospitality Ireland