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How McDonald’s Is Expanding Its Business

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Current operations

At the end of 3Q17, McDonald’s (MCD) was operating 36,976 restaurants, which includes 3,230 company-owned restaurants and 33,746 franchised restaurants. During the quarter, the company sold its China and Hong Kong markets to complete its goal of refranchising 4,000 restaurants.

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Unit growth

During the last four quarters, McDonald’s has increased its overall unit count by 361 restaurants, which represents a unit growth of 1.0% from 3Q16. Unit growth includes a net increase of 3,187 franchised restaurants and a decline of 2,825 company-owned restaurants due to refranchising.

Unit growth across segments

At the end of 3Q17, the United States segment operated 932 company-owned restaurants and 13,131 franchised restaurants. Compared to 3Q16, the company has increased the unit count of its franchised restaurants by 84 units, while the unit count of company-owned restaurants has declined by 198 units.

The International Lead Markets segment operated 962 company-owned restaurants and 5,921 franchised restaurants at the end of 3Q17. During the last four quarters, the segment has increased the unit count of franchised restaurants by 218 units, while the unit count of company-owned restaurants has declined by 143 units.

During the last four quarters, the company has increased the unit count of its franchised restaurants in its High-Growth Markets segment by 2,104 to 4,592, while the unit count of company-owned restaurants has declined by 1,734 units to 1,148.

At the end of 3Q17, the Foundational Markets segment operated 188 company-owned restaurants and 10,102 franchised restaurants. Compared to 3Q16, the unit count of franchised restaurants increased by 781 units, while the unit count of company-owned restaurants declined by 751 units.

Peer comparisons

During the same period, Domino’s Pizza (DPZ) and Chipotle Mexican Grill (CMG) increased their unit count by 1,182 restaurants and 196 restaurants, respectively.

Next, we’ll take a look at EBIT (earnings before interest and tax) margins for McDonald’s in 3Q17.

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