McDonald’s is increasing its minority stake in its China business from 20% to 48%. Since selling control of its restaurants in mainland China, Hong Kong, and Macau in 2017, the fast-food giant has doubled its footprint in China to more than 5,500. This makes it the second-largest market by number of locations for the chain. The company aims to reach 10,000 restaurants by 2028.
Financial terms of the deal were not disclosed, but McDonald’s CEO Chris Kempczinski stated that the acquisition was part of a broader strategy to own fewer restaurants and leave it to franchisees with knowledge of local markets to run their own locations. The deal is expected to close in the first quarter of 2024, assuming regulators approve it. Citic still retains its 52% stake in the business.
However, McDonald’s sales in China have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’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.” Despite this challenge, McDonald’s is drawing customers back into their stores by promoting their burgers.