Customers wait for their takeout outside a McDonald’s restaurant during the May Day holiday on May 1, 2022 in Beijing, China.
VCG | Getty Images
The fast food giant handed over 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, leaving franchisees with knowledge of local markets to run their own locations.
At that time, Citic, a public investment company, took a majority stake, while private equity giant Carlyle purchased a 28% stake. McDonald’s retained 20% of the company.
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 company.
“We believe there is no better time to simplify our structure, given the enormous opportunity to capture increased 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 in terms of number of locations. The chain aims to reach 10,000 restaurants by 2028.
But McDonald’s sales in China have struggled since the start of the Covid pandemic. The country accounts for about 4% of the chain’s total revenue, down 3.8% from the previous year, according to Factset estimates.
During McDonald’s latest earnings conference call, Kempczinski noted that China was facing “slowing macroeconomic conditions and historically low consumer sentiment,” although the chain is attracting customers by promoting its hamburgers.
Don’t miss these stories from CNBC PRO: