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January 30, 2007

Bye, Bye, Birdie!!

Analysis of: McDonald's plans to sell Boston Market | today.reuters.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
John Macaluso, President & Chief Executive OfficerJohn Macaluso
President & Chief Executive Officer, Cornell Management Group
Implications: McDonald's has regained it's focus and direction.
There is no reason for McD to hold on to Boston Market -- it will not deliver significant results in the foreseeable future.
The market conditions that drove McDonald's purchase of Boston Market in 1999 have long changed.

Analysis:

The sooner McDonald's completes the divestiture of Boston Market, the better. Boston Market has no more purpose to be a part of McD than did Chipotle, Pret a' Manger, or that Italian concept (who even remembers it's name?)
Boston Market will soon go the way of Chipotle; Baja Fresh and Tim Horton's; and Togo's, as national chains tighten their focus on their core brands.
A few years ago, McD had lost it's vision -- Quick-casual was the darling of the industry, and traditional fast-food QSR's were seen as dinosaurs in an evolving world, stuck in a low-growth mature segment.  Now that has changed -- McD, like many of it's competitors, has recast itself--new image, new menu, new improved service, and a back-to-the basics focus that has revitalized the brand.
Within this scenario, Boston Market is little more than a distraction.  In the short run, Boston Market cannot improve sales and profits or build enough new locations to make a significant contribution to McDonald's. 

Chicken items will certainly continue to have an importance place on McD's menu, but McD's does not need this brand within it's portfolio.
On the part of Boston Market, it would probably benefit from a dedicated executive team -- one solely focused on the success of the brand.  Who would buy Boston Market? ..probably either a private equity firm or a group of it's existing management team in a LBO.

Both brands will be better off without the other.


Other Analyses of the Same Source Article:
McDonald's WILL sell Boston Market
January 18, 2007, Author: GLG Expert Contributor

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