Customers wait for their takeout food outside a McDonald’s restaurant during the May Day holiday on May 1, 2022 in Beijing, China.
VCG | fake images
McDonald’s Is buying Carlyle’s stake in its business in China, increasing its minority stake from 20% to 48%.
The fast food giant sold control of its restaurants in mainland China, Hong Kong and Macau in 2017 for $2.1 billion. It was part of McDonald’s broader strategy to own fewer restaurants, letting franchisees with knowledge of local markets run their own locations.
At the time, Citic, a state-owned investment company, acquired the majority stake, while private equity giant Carlyle bought a 28% stake. McDonald’s retained 20% of the business.
Financial terms of the deal announced Monday were not disclosed. The deal is expected to close in the first quarter of 2024, assuming regulators approve it. Citic still retains its 52% stake in the business.
“We believe there is no better time to simplify our structure, given the tremendous opportunity to capture greater demand and further benefit from the long-term potential of our fastest-growing market,” McDonald’s CEO Chris Kempczinski said in a statement.
Since 2017, McDonald’s has doubled its presence in China to more than 5,500, making the market the second largest by number of locations. The chain aims to reach 10,000 restaurants by 2028.
But McDonald’s sales in China have struggled since the Covid pandemic began. The country represents around 4% of the chain’s total revenue, down 3.8% from the previous year, according to Factset estimates.
On McDonald’s latest earnings call, Kempczinski noted that China is dealing with “decelerating macroeconomic conditions and historically low consumer sentiment,” although the chain is attracting customers by promoting its burgers.
