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McDonald's sale of Donatos Pizzeria appears imminent

November 9, 2003

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OAK BROOK, Ill.—A string of positive sales reports at McDonald's units has the company saying it will sell all or some of its Partner Brands—Donatos Pizzeria, Chipotle Mexican Grill and Boston Market--in order to focus on its core burger brand.

According to the Wall Street Journal, McDonald's announced on Nov. 6 it will take charges in the fourth quarter for several items, including its unprofitable Partner Brands. That, stock watchers suspect, signals it likely will sell the brands at a loss.

Under the direction of former CEO Jack Greenburg, McDonald's acquired the Partner Brands hoping to offer new growth vehicles for its long-time franchisees. Instead, the brands only drained McDonald's Corporation's overall earnings.

According to the Journal report, for the first nine months of 2003, the Partner Brands cost the company $23.4 million on revenue of $839.5 million. For the comparable period in 2002, they lost $28.7 million on revenue of $760 million.

"We cannot allow anything, including the Partner Brands, to distract our owner-operators, suppliers and company people from maximizing the full potential of Brand McDonald's," Cantalupo wrote in a company memo to employees.

See related stories ...

* Donatos Pizzeria, other Partner Brands, under 'strategic review' at McD's
* Morgan Stanley to sell Donatos Pizzeria and other McDonald's Partner Brands
* The sale of Donatos Pizzeria: rumor or reasonable speculation?
* Despite rumors, Donatos Pizzeria isn't for sale, says official