McDonald's to Take $235M 2Q Charge Tied to Refranchising

Industries Dow Jones Newswires

McDonald's said it would book more than $200 million in charges in the June quarter related to its planned sale of 4,000 restaurants to franchisees by 2018, the company said Thursday. 

Continue Reading Below

The $235 million charge, which also includes some costs tied to relocating its headquarters to downtown Chicago, would lower profit by about 20 cents a share, the company said. 

The fast-food chain, which had outlined the plans last year as part of a financial push intended to appeal to investors, has targeted $500 million in general and administrative savings, mostly to be realized by the end of 2017. 

The Illinois-based company had said that after the sales, 93% of its locations would be owned by franchisees. The company ultimately wants to increase that number to 95%. 

Investors generally like the move toward more franchised locations because it gives companies a more stable cash flow from royalties, licensing and property leases and tend to have a higher profit margin while avoiding the ups and downs of labor and commodity costs. 

McDonald's is slated to report second-quarter results July 26. Shares of the company were inactive after hours and closed up 0.2% to $120.92 Thursday. 

Continue Reading Below

Write to Maria Armental at maria.armental@wsj.com