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McDonald's considers sale of Boston Market

GOLDEN Colo. Boston Market has alerted employees that the fast-casual chain may be sold by McDonald’s Corp., its owner for about seven years, so the burger giant can focus more intently on its core business.

ABoston Market spokeswoman confirmed that chain chief executive Michael Andres had given the heads-up during an annual state-of-the-company meeting with employees at the chicken specialist’s headquarters here on Thursday. Later, McDonald’s issued a statement saying that it would assess its options during 2007, but had not decided whether or not to divest the chain, or what form an exit might take.  

But the world’s largest restaurant concern has been steadily pruning its fold of secondary brands to devote more resources and attention to its resurging namesake brand.  That strategy led to the spin-off last year of Chipotle Mexican Grill through a $320-million initial public offering and the subsequent distribution of McDonald’s remaining stake in the Mexican chain as a special dividend to McDonald’s shareholders. Earlier, it had divested a stake in the Fazoli’s fast-casual Italian chain and sold its Donatos pizza chain back to its founders. At one time, the company also held a stake in Aroma, a European coffee concept.

With a sale or IPO of 630-unit Boston Market, McDonald’s only other restaurant holding would be an estimated one-third interest in the London-based Pret A Manger grab-and-go chain, which has struggled to gain a foothold in the U.S. market, starting with a beachhead in New York. McDonald’s also holds about a 53 percent stake in the Redbox DVD-vending business, which plans to have the rental machines in 1,600 McDonald’s units by July.

Boston Market was acquired out of bankruptcy by McDonald’s in 1999, largely for the chicken chain’s real estate. But, according to McDonald’s insiders, the burger giant discovered that it had a profitable business on its hands once costly leases were renegotiated. Just the licensing deal that put the Boston Market name on frozen grocery-store entrees generated high-margin sales of more than $100 million. McDonald’s once sought to compete with Boston Market by developing a similar concept called Hearth Express, but pulled the plug on the experiment before it had grown to more than a few outlets.

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