McDonald's Turnaround to Include Refranchising

McDonald’s Corp. announced Tuesday during an investor meeting that it intends to increase its franchise presence as part of its comprehensive turnaround plan.

Following a disappointing performance in 2014, the famous fast-food brand is raising its net annual general and administrative (G&A) expense savings goal to $500 million with intentions of meeting expectations by the end of 2017. The new target is 20 percent lower than expenses at the beginning of 2015.

McDonald’s believes these savings will come in part through refranchising efforts. Initial plans called for the refranchising of 3,500 restaurants, but it has now raised expectations to 4,000 by 2018. This is part of a long-term goal of being 95 percent franchised, the majority of which will happen in the High Growth and Foundational Market segments.

Brand CEO Steve Easterbrook said during the meeting that the goal is to redirect McDonald’s to ensure a promising future.

“Our turnaround depends on this: We must run great restaurants each and every day,” Easterbrook said according to QSR Magazine. “We're leveraging our competitive strengths: iconic menu items that customers love, a unique franchise model that empowers local entrepreneurs, size and scale that makes operational investments efficient, and a global, well-diversified geographic footprint. Together, these brand attributes provide McDonald's with the foundation and capabilities for continued success.”