McDonald’s Jumps as CFO Discusses Returning Cash

McDonald’s Corp., the world’s largest restaurant chain, rose the most in more than two years after Chief Financial Officer Pete Bensen said the company may look to cut costs and borrow more cash to return to investors.

The shares climbed 3.8 percent to $98.78 at the close in New York for the biggest gain since Aug. 9, 2011. Oak Brook, Illinois-based McDonald’s has advanced 1.8 percent this year, while the Standard & Poor’s 500 Restaurants Index has increased 0.5 percent.

McDonald’s is “actively looking at ways to optimize our capital structure, while maintaining our long-term financial strength,” Bensen said today at an investor conference. That includes scrutinizing general and administrative expenses and selling stores to franchisees in countries such as China, South Korea and Taiwan, he said.

McDonald’s can “probably get more aggressive” with its borrowings and still maintain its credit rating, Bensen said. In response to a question, he said that McDonald’s could raise its target of returning $5 billion in cash to shareholders if the company increased its leverage.

The company has been struggling to turn around declining same-store sales amid shaky consumer confidence and harsh weather. McDonald’s said yesterday that sales at its locations open at least 13 months fell 0.3 percent in February as drops in the U.S. and its Asia Pacific, the Middle East and Africa region dragged down results.

“They’re basically looking at ways to cut some costs and maybe refranchise a little bit more,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. “Less corporate ownership means less G&A.”

McDonald’s has about 35,400 stores worldwide, and about 81 percent of those are franchised.

Before it's here, it's on the Bloomberg Terminal.