McDonald's: back to buns

McDonald's was last night expected to confirm plans to divest a controlling stake in some or all of its "partner brands" - including the Pret a Manger sandwich chain - as part of a programme to restore the fortunes of the ailing fast food business.

New management at the company - led by chief executive Jim Cantalupo, who took the top job three months ago - was preparing yesterday to deliver a presentation to investors in New York that is likely to include a series of measures aimed at reversing a long slide in sales and profitability.

At the start of the year McDonald's recorded its first quarterly loss - $344m (£222m) - as a publicly traded company due to the cost of closing down 719 underperforming restaurants. Mr Cantalupo has abandoned double-digit growth targets and told shareholders that a 10-15% growth rate is "not realistic". Shares in the company are trading at a 10-year low.

Mr Cantalupo has embarked on a back to basics policy aimed at improving the quality of service, restaurant cleanliness and food. McDonald's has lost ground to rivals such as Wendy's and Burger King, and performed badly in surveys of the fast food sector among consumers.

As part of that strategy he is expected lift the "for sale" sign over the so-called partner brands acquired over the past five years to address the threat of the core burger chain reaching saturation point.

While the five brands - also including Boston Market and Chipolte Mexican Grill - have added $1bn in sales, they have also been criticised for being a management distraction and a drag on capital spending.

One option is to package the brands into a single unit and sell a majority stake in it, a move that could raise $500m.

McDonald's spent millions on a new system for short-order cooking and to improve quality, but the result was slower service time - and analysts expect the reintroduction of cooking in advance. There is also likely to be greater emphasis on healthier food, continuing a trend already in train at the company.