In 2017, McDonald’s sold control of its restaurants in mainland China, Hong Kong, and Macau to Carlyle and Citic. At that time, Citic took the majority stake while Carlyle bought a 28% stake. However, McDonald’s retained 20% ownership. The fast-food giant has now announced that it is buying Carlyle’s stake in its China business, increasing its minority share from 20% to 48% ownership. Financial terms of the deal were not disclosed, but it is expected to close in the first quarter of 2024 pending regulatory approval.
Since then, McDonald’s has doubled its footprint in China to more than 5,500 restaurants and now holds a second-largest position by number of locations. Despite this growth, the chain has struggled with sales since the Covid pandemic began. According to Factset estimates, China accounts for about 4% of McDonald’s total revenue and saw a decline of 3.8% from the year prior compared to other markets like India and Brazil where the company experienced growth. On a recent earnings call, McDonald’s CEO Chris Kempczinski acknowledged that “slowing macroeconomic conditions and historically low consumer sentiment” are affecting sales in China but stated that they are drawing customers by promoting their burgers.
McDonald’s decision to increase its minority share ownership in China reflects its continued commitment to expanding its presence in one of its fastest-growing markets globally. With this move, McDonald’s aims to reach 10,000 restaurants by 2028 as it continues to capitalize on opportunities for growth in Asia Pacific region where there are still many untapped markets for fast food chains like McDonald’s.