McDonald’s is set to increase its ownership stake in China operations from 20% to 48% through the acquisition of Carlyle’s stake. The fast food giant sold control of its restaurants in mainland China, Hong Kong and Macau to Carlyle and Citigroup in 2017 for $2.1 billion as part of a broader strategy to leave franchisees with knowledge of local markets running their locations.

The deal announced Monday will give McDonald’s a larger share of the business, which has doubled its footprint in China to more than 5,500 restaurants since then, making it the market’s second largest by number of locations. Financial terms were not disclosed, but it is expected to close in the first quarter of 2024, subject to regulatory approval. Citigroup still retains its 52% stake in the company.

“We believe there is no better time to simplify our structure,” said McDonald’s CEO Chris Kempczynski, “given the tremendous opportunity to capture increased demand and further leverage the long-term potential of our fastest-growing market.” Despite this, McDonald’s sales in China have been affected by the Covid pandemic, accounting for about 4% of the chain’s total revenue and down by 3.8% from the previous year according to Factset estimates. However, Kempczynski noted that China faces “slowing macroeconomic conditions and historically low consumer sentiment,” but that the chain is attracting customers through promotions on burgers.

By Editor

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