Customers wait for their takeaway meals outside a McDonald’s restaurant during the May holiday on May 1, 2022 in Beijing, China.
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McDonald’s is buying Carlyle’s stake in its Chinese operations, increasing the minority stake from 20% to 48%.
The fast food giant sold control of its restaurants in mainland China, Hong Kong and Macau for $2.1 billion in 2017. It was part of McDonald’s broader strategy to own fewer restaurants and leave it to franchisees with knowledge of local markets to run their own locations.
At the time, Citic, a state-owned investment company, took the majority stake, while private equity giant Carlyle bought a 28% stake. McDonald’s retained 20% of sales.
Financial terms of the deal announced Monday were not disclosed. The deal is expected to close in the first quarter of 2024, assuming regulatory approval. Citic still retains its 52% stake in the company.
“We believe there is no better time to simplify our structure given the tremendous opportunity to meet increased demand and further capitalize on 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 footprint in China to more than 5,500, making it the market’s second largest by number of locations. The chain wants to reach 10,000 restaurants by 2028.
But McDonald’s sales in China have struggled since the Covid pandemic began. According to Factset estimates, the country accounts for about 4% of the chain’s total sales, down 3.8% from the previous year.
On McDonald’s latest earnings call, Kempczinski noted that China is experiencing “slowing macroeconomic conditions and historically low consumer confidence,” although the chain is attracting customers by promoting its burgers.
