McDonald’s is acquiring Carlyle’s investment in its China operations, expanding its minority stake from 20% to 48%.
- IMPORTANT NOTES
- McDonald’s is growing its stake in its China operations from 20% to 48%.
- Carlyle and Citic purchased control of the fast-food chain’s locations in mainland China, Hong Kong, and Macau in 2017.
- In the five years afterward, McDonald’s has more than doubled its footprint in China to over 5,500 stores, making it the company’s second-largest market by number of locations.
In 2017, the fast-food corporation sold control of its restaurants in mainland China, Hong Kong, and Macau for $2.1 billion. It was part of It’s larger aim to own fewer restaurants, enabling franchisees with local market experience to run their own sites. Citic, a state-owned investment business, purchased the majority share at the time, while private equity behemoth Carlyle purchased a 28% stake. McDonald’s retained 20% of the company. The deal’s financial parameters were not disclosed on Monday. If regulators approve the transaction, it is scheduled to close in the first quarter of 2024. Citic has a 52% stake in the company.
“We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and benefit further from our fastest-growing market’s long-term potential,” said McDonald’s CEO Chris Kempczinski in a statement.
Since 2017, It has more than doubled its footprint in China to over 5,500 stores, making it the company’s second-largest market by number of locations. By 2028, the business hopes to have 10,000 locations. However, since the COVID epidemic began, McDonald’s sales in China have suffered. According to Factset estimates, the country represents around 4% of the chain’s total income, down 3.8% from the previous year.
Kempczinski said on it’s most recent earnings conference that China is grappling with “slowing macroeconomic conditions and historically low consumer sentiment,” despite the fact that the restaurant is attracting customers by promoting its burgers.
Frequently asked questions
Why did McDonald give up the majority equity in China?
It owns and runs around 2,400 restaurants in mainland China and over 240 in Hong Kong. According to Ben Cavender, a senior analyst at China Market Research, a Shanghai-based consultancy, McDonald’s chose a franchise contract to save money on investing and modernizing outlets.
What is one of the biggest problems in McDonald’s in China?
Food safety problems harm China’s brand
Food safety is near the top of any list of public concerns in China, so McDonald’s took a beating in July when an undercover television investigation accused the company of using a mainland supplier who relabelled expired meat, writes Patti Waldmeir in Shanghai.
What is the McDonald’s strategy in China?
The decision to emphasize environmental issues in order to promote its green credentials and appeal to young consumers is a smart approach for expanding its popularity. It comes as the company looks to spread its McCafe concept across the country in order to reach out to China’s youthful, affluent consumers.
What is McDonald’s called in China?
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