000727 McDonald's to Test Franchising BrandsJuly 10, 2000Chicago - McDonald's Corp. said it will begin testing the growth potential of its other restaurant brands, which include Chipotle Mexican Grill and Boston Market, by allowing a few of its franchisees to own and run the stores. “We are in the process of seeing how our owner-operators can run these restaurants,” Alan Feldman, president of McDonald's U.S.A. told reporters on a recent tour of restaurants in the U.S. West. “The interest level has been pretty good.” About six McDonald's owner-operators will be selected this year to run either a Chipotle, Boston Market or Donatos Pizza restaurant. “Our goal right now is to make sure these concepts have the economics and brand,” Feldman said. One Wall Street analyst said the franchise test of other brands was part of the company's plan to see if it can offer its 2,773 U.S. McDonald's restaurant owners another way of growing their businesses. “If they (McDonald's) can ultimately give growth vehicles to the existing franchisee base, that would be a very attractive proposition,” Patrick Schumann, food and restaurant industry analyst with Edward Jones, said on Monday. “I do believe its an experimental phase, and they probably have not decided which way they will go.” The burger giant bought the struggling Boston Market restaurant chain, which has about 851 restaurants, from bankrupt Boston Chicken Inc. in 1999 for about $173.5 million. Boston Market restaurants serve homestyle meals, sandwiches, side dishes and salads. McDonald's also bought Columbus, Ohio-based Donatos Pizza in May 1999 and purchased a minority stake in Denver-based Chipotle in April 1998 as a way of expanding without taking away from its existing hamburger business. The company's non-hamburger brands, which also include London-based Aroma cafes, represent a very small part of McDonald's business. Those brands generated $91 million in sales in 1999. That figure compares with McDonald's total sales of $38.5 billion in 1999. There are about 60 Chipotle restaurants, 150 Donatos and 20 Aroma Cafes. The company has said it will add 30 to 50 Chipotles, about 30 to 40 Donatos and about 20 Aroma Cafes in 2000. McDonald's operates more than 27,000 restaurants serving more than 43 million people a day in 119 countries. About 80% of McDonald's restaurants are owned and operated by independent franchisees.
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