McDonald’s has announced that it is buying a larger stake in its China business from private equity giant Carlyle, increasing its minority ownership from 20% to 48%. The fast-food giant sold off control of its restaurants in mainland China, Hong Kong, and Macau in 2017 for $2.1 billion as part of a broader strategy to own fewer restaurants. At that time, Citic, a state-owned investment firm, took the majority stake, while Carlyle bought a 28% stake.

Since then, McDonald’s has doubled its footprint in China to more than 5,500 locations and is now the second-largest restaurant chain by number of locations. 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.

The financial terms of the deal announced Monday were not disclosed. It is expected to close in the first quarter of 2024 pending regulatory approval. Citic still retains its 52% stake in the business. McDonald’s CEO Chris Kempczinski stated that “We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential.”

McDonald’s aims to reach 10,000 restaurants by 2028 and this acquisition shows their commitment towards expanding their business further in China. Despite challenges such as slowing macroeconomic conditions and historically low consumer sentiment, they are confident about drawing customers with promotions like burgers which have proven successful in attracting new customers.

By Editor

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