Foodservice

McDonald’s Says No to REITs, Yes to Signature Burgers

LinkedIn Pinterest Tumblr

After lengthy deliberation, McDonald’s Corp. has decided not to spin off its properties into a real estate investment trust (REIT), even though a number of shareholders had pushed for such action. Among them was Larry Robbins, chief executive officer of Glenview Capital Management, who said that setting up a REIT structure could potentially unlock more than $20 billion in value.

During an investor’s meeting on November 10, Pete Benson, the company’s chief administrative officer, stated that the idea was “closely considered, given its potential tax advantages and current marklet trading multiples.”

Elaborating on the decision, he commented: “Our review went beyond financial measures and evaluated the impact on all stakeholders, including our shareholders’ long-term interests. We have concluded that any potential value creation from a REIT is out-weighed by the significant financial and operational risks to our business and the continued progress of our turnaround, and we do not believe that pursuing a REIT would be in the best interest of McDonald’s at this time.”

Real estate has long been an important part of McDonald’s business, as it collects rents from franchisees at conmpany-owned properties. This revenue stream reportedly amounted to over 22% of total reciepts in 2014.

CEO Steve Easterbrook told shareholders that the company’s turnaround plan, still in its early stages, is “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. My priorities for McDonald’s as a modern, progressive burger company are three-fold: driving operational growth, creating brand excitement and enhancing financial value. We are taking bold, urgent action to reset the business and prepare the company for the next chapter of its history.”

BBQ

He continued: “Our turnaround depends on this: we must run great restaurants each and every day. 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.”

Enter the Signature Collection of Premium Burgers
Meanwhile, McDonald’s international research and development teams continue to come up with product innovations to diversify and enhance menu offerings around the world. A recent example of this is the pilot for a new range of burgers in the United Kingdom.

The Signature Collection, launched in 28 restaurants, was created by McDonald’s team of food specialists and their prestigious Chefs Council. The council is a team of chefs with a wide range of experience from Michelin starred restaurants to cooking for international royalty. This range of premium burgers features a thicker beef patty made from 100% British and Irish meat and available in three flavors — The Classic, The BBQ and The Spicy each served in a brioche-style bun.

Headed up by Duncan Cruttenden, food development director at McDonald’s UK, this team of experts used customer insight to create a new range of mouth-watering premium burgers. Three key areas arose from the research which explored the customer’s expectations from a premium burger at McDonald’s – a thicker beef burger, high quality ingredients and freshly prepared. McDonald’s Food Development team then worked alongside the Chef’s Council to create the new range which aims to deliver on all these areas.

Cruttenden commented: “We are committed to listening to our customers and evolving our menu to offer something for everyone. When the Chefs Council started to develop this new premium offering, we worked with a brief generated by our customers – they told us they wanted thicker beef patties, high quality ingredients and freshly prepared. We’ve crafted a range that is a truly exciting permanent addition to our menu – every product has to earn a place on our menu and our customers have told us the Signature Collection has done just that.”

The Signature Collection is served in new stylish black packaging, with fries served in matching fry cartons with every Signature order. Here’s a description of the products’ ingredients:

  • The Classic: 100% British and Irish beef patty, two rashers of Beechwood smoked bacon, a slice of natural cheddar cheese, wholegrain mustard mayo, ketchup, Batavia lettuce and red onion in a Brioche-style bun
  • The BBQ: 100% British and Irish beef patty, smoky BBQ sauce, coleslaw, red onion, Batavia lettuce, Beechwood smoked bacon and a slice of natural cheddar cheese in a Brioche-style bun
  • The Spicy: 100% British and Irish beef patty, Jalapeño slices, Pepper Jack cheese, Batavia lettuce, mayo and a spicy relish in a Brioche-style bun

theSpicy

As part of the ongoing restaurant transformation program, McDonald’s has introduced new lay-outs and increased technology to the kitchens, meaning all iconic menu items will be made specially to order for customers. Due to the thicker patty the new burger takes a little longer to cook than other burgers on the menu which means at quieter times there could be a short wait for a Signature Collection burger.

The trial is taking place in 28 restaurants in London and the South, and is set to roll out across the country next summer when the Signature Collection will become a permanent item on the menu in around 400 restaurants already refurbished as part of the ongoing “Experience of the Future” transformation program. This is just one of the major developments introduced to enhance the McDonald’s menu and service experience in the UK.