Last Updated on November 21, 2023 by Robert C. Hoopes
McDonald’s to Increase Ownership Stake in China Business
Leading fast-food chain McDonald’s is set to increase its ownership stake in its China business from 20% to 48%, as it plans to buy out Carlyle’s stake. This move comes after the company sold control of its restaurants in mainland China, Hong Kong, and Macao in 2017 at a price of $2.1 billion.
McDonald’s strategy has been focused on owning fewer restaurants while allowing franchisees with local market knowledge to run locations. This approach has proven successful so far, leading to improved operational efficiency and better customer understanding.
During the 2017 sell-off, Citic, a state-owned investment firm, took the majority stake in McDonald’s China business, while Carlyle acquired a 28% stake. McDonald’s retained a 20% ownership. However, with this latest acquisition, the fast-food giant will increase its hold on the market.
The financial details of the deal were not disclosed, but it is expected to close in the first quarter of 2024, pending regulatory approval. Citic will maintain its majority stake of 52% in the business.
McDonald’s CEO, Chris Kempczinski, sees this as the opportune moment to simplify the company’s structure and take advantage of the long-term potential in China’s growing market. With the country’s rising middle class and their increasing demand for Western-style fast food, the chain is positioned to benefit from this growth.
McDonald’s has been actively expanding in China, opening new stores to meet the growing demand. The company currently operates over 4,500 restaurants in the country, making it one of the firm’s largest markets outside the United States.
Investing in China also aligns with McDonald’s focus on global expansion. The company has been aiming to diversify its revenue streams and reduce its reliance on the US market.
As McDonald’s continues to solidify its position in China, it will leverage its brand strength and operational expertise to stay at the forefront of the fast-food industry in one of the world’s most promising markets.