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