05 Aug 2025 2 min read

The implications of McDonald's selling their stores across various dimensions

McDonald's announced the sale of eight retail properties in Hong Kong on July 28, 2025. The properties are at the best locations for doing business. The sale is part of a larger plan to sell all 23 retail properties owned by McDonald's in Hong Kong.

Does that mean McDonald’s is going to scale down its business in Hong Kong, or does it review their pessimism in Hong Kong property market?

The sale of McDonald's retail properties in Hong Kong raises several important questions regarding their business strategy and market outlook:

1. Scale Down or Market Review?

Not Necessarily a Scale Down: Selling properties does not inherently mean McDonald's is scaling down its business. It could indicate a strategic shift to optimize operations and focus on franchising.
Market Sentiment: The decision may reflect a review of the Hong Kong property market, possibly indicating concerns about future profitability or a desire to liquidate assets in a changing economic environment.

2. Reasons for the Move

Focus on Core Business: By selling properties, McDonald's may aim to concentrate on its core business operations and franchise model, reducing the complexities of property management.
Capital Reallocation: The funds from these sales can be reinvested in growth initiatives, technology, or new market opportunities.

3. Change to Core Business?

Strategic Shift: This move can be seen as a change in strategy, emphasizing franchising over direct ownership. It aligns with global trends of many companies focusing on core competencies while outsourcing non-core functions.

Potential Positive Impact: If the sales lead to immediate cash flow and reduced operational costs, it could boost investor confidence and positively affect the share price.
Long-Term Considerations: Sustained share price growth will depend on how effectively McDonald's uses the proceeds from these sales to drive future growth and profitability.

5. Catering Market Impact

Not Necessarily a Reduction: While the sale of properties might affect certain locations, it does not necessarily imply a reduction in the overall catering market in Hong Kong. McDonald's may adapt its strategy to leverage franchises or delivery services instead.

6. Worldwide Trend in Property Market

Global Context: The sale of properties may reflect broader trends in the retail and commercial property markets, influenced by economic conditions, changing consumer behaviors, and the rise of delivery and online services.
Local vs. Global Dynamics: While property markets may face challenges globally, local factors, such as economic conditions and regulations, will heavily influence the impact in specific regions like Hong Kong.

7. The implication to other similar business

This may serve as an example for other business in Hong Kong facing the declining property values to reduce their running cost and focusing more on their core business.
If a strong franchise network exists, selling properties and focusing on their core business can streamline operations and enhance profitability.
In Hong Kong, after the attack of COVID-19, there seems to have a shift in consumer preferences toward delivery and takeout services, so this may be more amenable to reducing physical retail footprints and focusing on alternative service models.

Conclusion

Overall, McDonald's decision to sell its properties in Hong Kong appears to be a strategic move rather than a sign of retreat. It reflects a broader trend of optimizing core business operations and adapting to changing market conditions, which could have positive implications for its share price and future growth.