McDonald’s Expands Control in China with Increased Minority Stake

McDonald’s is set to increase its minority stake in its China business from 20% to 48%, as part of a deal with private equity giant Carlyle. In 2017, the fast-food giant sold control of its restaurants in mainland China, Hong Kong and Macau to Carlyle and Citic. Since then, McDonald’s has doubled its footprint in China to more than 5,500, making it the second-largest market by number of locations.

The financial terms of the deal announced Monday were not disclosed, but it is expected to close in the first quarter of 2024 pending regulatory approval. Citic still holds a majority stake in the business, with a 52% share. The move by McDonald’s comes as part of a broader strategy to own fewer restaurants and leave franchisees with knowledge of local markets to run their own locations.

McDonald’s has struggled with sales in China since the Covid pandemic began, accounting for about 4% of the chain’s total revenue, down 3.8% from the year prior according to Factset estimates. However, CEO Chris Kempczinski noted on the latest earnings call that China is dealing with “slowing macroeconomic conditions and historically low consumer sentiment.” Despite this challenge, McDonald’s continues to promote its burgers and draw customers into its restaurants. With this move, McDonald’s aims to reach 10,000 restaurants by 2028.