McDonald’s Corporation (NYSE:MCD) Strives To Expand Its China Franchise Business By Selling Taiwan Stores

McDonald’s Corporation (NYSE:MCD) is on a mission to turn around its fortunes in Asia and at the same time cut costs globally. It has an intention of selling its stores in Taiwan to a franchise operator to expand its franchise business in China.

For its mature and established markets, like the U.S McDonald makes use of franchisees and licensees. A more costly model has been used in other areas to operate its stores and at the same time oversee their quality and growth.

 To refit the US business, Steve Easterbrook, who is the Oak Brook, Ill., company’s new chief executive, has been selling more restaurants to franchisees besides the elimination of management layers. His target is now on international markets that are expected to fetch more sales and profits.

An expansion of 90% from the current 81% is what Mr. Easterbrook is looking up to from the global franchise ownership that includes the US. Besides, the Company is optimistic to have sold 3,500 restaurants to franchisees by 2018.

McDonald, which has independently operated the 413 Taiwan stores for more than three decades ago, is now looking for a franchise candidate to steer its operations. It was only in 2008 when the Company embraced franchising for its stores in China, which it has operated for more than two decades.

A 20% or more of its 2,000-plus stores in China are already franchised. With this and according to its spokesperson, the Company’s intention is to increase the licensees and franchisees. This is what will bring growth and economic efficiency.

Sales from Asia were not so pleasing last year as a result of supplier affecting the menu items. On the hand and just like any other industry, McDonald’s Corporation (NYSE:MCD) has also had its share of food contamination scares that crippled the sales at some point.

However, despite the sales drop, the Company is expectant to pull back its customers once the level of sales performance is normalized and especially in China.

 

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David Barry

David Barry

Barry is a senior journalist at Us Markets Daily. He reports, shoots and edits many of his own stories by himself.