McDonald’s is increasing its minority stake in its China business from 20% to 48%. The fast-food giant sold control of its restaurants in mainland China, Hong Kong and Macau to Carlyle and Citic in 2017 for $2.1 billion, as part of a broader strategy to own fewer restaurants. Citic, a state-owned investment firm, took the majority stake, while private equity giant Carlyle bought a 28% stake. McDonald’s held on to 20% of the business. Financial terms of the deal announced Monday were not disclosed, but it is expected to close in the first quarter of 2024, assuming regulators approve it.
Since then, McDonald’s has doubled its footprint in China to more than 5,500 and now holds the second-largest market by number of locations. The chain aims to reach 10,000 restaurants by 2028. However, sales in China have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’s total revenue, down 3.8% from the year prior according to Factset estimates. On McDonald’s latest earnings call, Kempczinski noted that China is dealing with “slowing macroeconomic conditions and historically low consumer sentiment,” although the chain is drawing in customers by promoting its burgers.
“We believe there is no better time to simplify our structure,” said Chris Kempczinski CEO of McDonald’s in a statement regarding this move . “Given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential.”