According to Reuters, McDonald's Corp. MCD is planning to sell all its Taiwan-based restaurants to a franchise operator. The quick service giant operates 413 outlets in the country. McDonald's is looking for a single franchise partner for developmental license and overseeing its Taiwanese operations.
The sale is part of McDonald’s’ strategic decision to lower costs globally, and revive its China business. In fact, CEO Steve Easterbrook had announced in May a restructuring plan to turn the company’s fortunes around, which included more franchising, lower G&A expenses and higher rewards for shareholders.
The company expects to refranchise 3,500 restaurants by 2018 end, thus accelerating the global franchised percentage from the current 81% to nearly 90%. Management believes a heavily franchised business model will generate more stable and predictable revenue and cash flow streams and require a less resource-intensive support structure.
The turnaround plan comes in the wake of declining comps recorded by the company over the past few quarters The company is still reeling under the damage done by a food safety scandal, which resulted in reduced traffic at its outlets.
McDonald's has a Zacks Rank #3 (Hold). Some stocks that can be considered in the restaurant industry are Zoe's Kitchen, Inc. ZOES, Dave & Buster's Entertainment, Inc. PLAY and Bravo Brio Restaurant Group, Inc. BBRG. While Zoe's Kitchen and Dave & Buster's Entertainment sport a Zacks Rank #1 (Strong Buy), Bravo Brio carries a Zacks Rank #2 (Buy).
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