McDonald’s increases its minority stake in China business

Key Points

• Ownership Increase in China Business: McDonald’s is set to acquire Carlyle’s stake in its China business, raising its minority ownership from 20% to 48%. This move is part of McDonald’s strategy to own fewer restaurants globally, with a focus on franchisees managing local operations.
• Previous Structure and Stakeholders: In 2017, McDonald’s sold control of its restaurants in mainland China, Hong Kong, and Macau for $2.1 billion. During that transaction, Citic, a state-owned investment firm, took the majority stake, Carlyle acquired a 28% stake, and McDonald’s retained a 20% ownership. Citic still holds the majority with a 52% stake, while McDonald’s aims to simplify its structure with the recent increase in ownership.
• Expansion Goals and Sales Challenges: Since 2017, McDonald’s has doubled its footprint in China to over 5,500 locations, making it the second-largest market by the number of restaurants. The company aims to reach 10,000 restaurants in China by 2028. However, McDonald’s sales in China have faced challenges since the COVID-19 pandemic, with the country contributing about 4% to the chain’s total revenue, down 3.8% from the previous year. The sales struggle is attributed to slowing macroeconomic conditions and historically low consumer sentiment in China.