McDonald’s is increasing its 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. Since then, McDonald’s has doubled its footprint in China to over 5,500 locations, making it the second-largest market by number of locations for the chain.
In a move to simplify its structure and capture increased demand in the fastest growing market, McDonald’s has announced that it is buying Carlyle’s stake in its China business. This will increase its minority ownership from 20% to 48%. The deal is expected to close in the first quarter of 2024, pending regulatory approval. Citic still retains its majority stake of 52%.
“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,” said Chris Kempczinski, CEO of McDonald’s. Since selling off control of its restaurants in mainland China, Hong Kong and Macau five years ago, McDonald’s has grown exponentially and aims to reach 10,000 restaurants by 2028.
Despite this growth, sales have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’s total revenue but saw a decline of approximately 3.8% compared to the year prior according to Factset estimates. On a recent earnings call with investors, Kempczinski noted that “China is dealing with slowing macroeconomic conditions and historically low consumer sentiment.” However, he also mentioned that by promoting burgers and other menu items they are drawing customers into their restaurants again despite these challenges.