McDonald’s also said it plans to boost dividends and stock buybacks in order to return more cash to shareholders.
Advertisement
For starters, McDonald’s will not create a real estate investment trust (REIT) for its extensive real estate assets.
The company announced a 5 percent increase in its dividend yield for the fourth quarter, translating into a quarterly dividend of $0.8925 per share. And, the Internal Revenue Service recently signaled that REITs and other corporate spinoffs may violate rules aimed at preventing companies from avoiding taxes.
McDonald’s also announced today that it would be adding to its menu.
McDonald’s shares have been trading at record highs since Easterbrook said on October 22 that a rebound in quarterly sales at established restaurants showed his turnaround plan was beginning to take hold.
The new target is almost double the $16.4 billion returned to shareholders for the three years ended in 2013.
McDonald’s also is selling more of its company-owned restaurants to franchisees, insulating itself from swings in the costs of commodities and labor. That increased debt load led Standard & Poor’s to downgrade the company’s credit rating.
But executives suggested that they would pay closer attention to the value of the properties and land the company owns, and would consider opportunities to sell sites in which a McDonald’s is not the most valuable use. While we are still in the early stages of turning around our business, we are gaining momentum by focusing on our customers and what matters most to them – hot and fresh food, fast and friendly service, and a contemporary restaurant experience at the value of McDonald’s. It’s financing the effort by borrowing money. The Oak Brook, Illinois-based company said this puts it in position to meet its new longer-term goal to be 95 per cent franchised. “We’re committed to raising the bar on all aspects of our financial performance”.
Easterbrook, who assumed the CEO role in March, has been working to pull the fast-food chain out a prolonged sales slump. Spinning off real estate into stand-alone real-estate companies has been an increasingly popular move by companies as a way to reduce real-estate exposure and provide potential tax savings.
Advertisement
A few investors had hoped Mr. Easterbook, on Tuesday, would share details on the performance of one of his biggest operational changes, the introduction of all-day breakfast last month. He added that all-day breakfast has thus far performed “a little above” where the company expected, though he noted that, “It will settle down at a certain rate”.
