In 2017, McDonald’s sold off control of its restaurants in mainland China, Hong Kong, and Macau for $2.1 billion to private equity giant Carlyle and state-owned investment firm Citic. Since then, the fast-food giant has doubled its footprint in China to more than 5,500 locations and is now its second-largest market by number of locations.
On Monday, McDonald’s announced that it is buying Carlyle’s stake in its China business, increasing its minority share from 20% to 48% ownership. The financial terms of the deal were not disclosed but are expected to close in the first quarter of 2024 pending regulatory approval. Citic still retains its majority stake in the business with a 52% stake.
McDonald’s CEO Chris Kempczinski stated that “We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential.” However, sales in China have struggled since the Covid pandemic began. The country accounts for about 4% of McDonald’s total revenue, down 3.8% from the year prior according to Factset estimates. On McDonald’s latest earnings call, Kempczinski noted that China is dealing with “slowing macroeconomic conditions and historically low consumer sentiment,” although the chain is drawing in customers by promoting its burgers.