• Fri. Dec 8th, 2023

McDonald’s Strengthens Its Presence in China’s Market with Emphasis on Minority Investments

ByEditor

Nov 20, 2023

In recent news, McDonald’s has announced that it is increasing its minority stake in its China business from 20% to 48%. This move comes after 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 and now holds the second-largest market by number of locations with over 5,500 restaurants.

The deal announced Monday involves McDonald’s buying Carlyle’s stake in its China business, bringing their ownership to 48%. The financial terms of the deal were not disclosed, but it is expected to close in the first quarter of 2024 pending regulatory approval. Citic still retains its majority stake in the business.

McDonald’s CEO Chris Kempczinski stated that the company believes this is the perfect time to simplify their structure given the tremendous opportunity to capture increased demand and further benefit from China’s long-term potential. By reaching 10,000 restaurants by 2028, McDonald’s aims to continue expanding its presence in one of its fastest growing markets.

Despite this expansion, sales for McDonald’s in China have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’s total revenue, down from 3.8% a year prior according to Factset estimates. On a recent earnings call, Kempczinski noted that “slowing macroeconomic conditions and historically low consumer sentiment” are affecting sales in China despite promotions on burgers drawing customers back into stores.

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