1 min read.Updated: 08 Dec 2021, 09:22 PM ISTHEATHER HADDON, The Wall Street Journal
Chain says it will put millions into loans to boost minority representation
McDonald’s Corp. said Wednesday it would offer $250 million in low-interest loans to new franchisees over the next five years as a way to help increase diverse ownership of its U.S. restaurants.
“We must challenge ourselves, even more, to invest in the future," McDonald’s Chief Executive Officer Chris Kempczinski said.
Blacks, Hispanics and Asians accounted for 29.6% of all U.S. franchisees as of the end of 2020, while women made up 28.9% of domestic owners, McDonald’s said. The company counted more than 2,400 U.S. restaurant owners as of the end of last year.
McDonald’s recently has put more focus on racial inclusion among its employees, franchisees and suppliers. The company this year tied executives’ annual incentives to increasing the share of women and racial minorities in leadership roles by 2025.
The fast-food company has received criticism from some local lawmakers and former franchisees over racial matters. Last year, McDonald’s was sued by Black ex-owners, who accused the company of selling them subpar restaurants. The company’s approach caused the number of Black owners in the U.S. to fall, the owners alleged.
In its legal rebuttal, McDonald’s said that it wasn’t in the company’s interest to have its franchisees fail and that it provides extensive resources to its owners to succeed in their businesses.
Mr. Kempczinski in November apologized for a text to Chicago’s mayor regarding the shooting deaths of two Chicago children, which critics called racially insensitive. Mr. Kempczinski has said the comments were wrong, and has discussed the matter with employees, franchisees and local leaders.
McDonald’s owners generate some of the largest annual sales per restaurant among any fast-food chain in the country, but it is costly to get into franchising at the chain. Total investment needed to operate a traditional McDonald’s franchise ranges from $1,008,000 to $2,214,080, including an initial franchise fee of $45,000, according to the company. Individuals must have at least $500,000 of free assets before applying.
Beyond the U.S., McDonald’s said Wednesday it would also seek to recruit and mentor diverse franchisees in its international markets, such as in Western Europe. Roughly 93% of McDonald’s restaurants globally are owned and run by independent operators.