McDonald’s today announced its acquisition of investment firm Carlyle’s minority stake in the partnership that runs the chain’s China business. This includes the McDonald’s business in mainland China, Hong Kong and Macau. The CITIC Consortium, mainly through its equity affiliate CITIC Capital, will maintain its controlling ownership stake in the market. Upon completion of the transaction, expected in Q1 2024, the consortium will own 52% of the market and McDonald’s will increase its stake from 20% to 48% ownership.
McDonald’s China is the company’s second largest market, with 5,500 stores; more than double the chain’s presence from 2017. The business has experienced systemwide sales growth of more than 30% year-to-date since September 2019.
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“Our strategic partnership with CITIC and Carlyle has been extremely successful in growing McDonald’s presence in the region since it began,” CEO Chris Kempczinski said in a statement. “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.”
With this acquisition, McDonald’s and CITIC will continue working together to execute the company’s Accelerating the Arches strategy, including the development of new restaurants. That said, during McDonald’s most recent earnings call, Kempczinski acknowledged a slowing macroeconomic environment and “historically low consumer sentiment” in China. Northcoast Research analyst Jim Sanderson told Reuters that the company’s stronger investment position “should give them a better voice in making sure that the growth they expect out of that marketplace occurs.” The company’s goal is to reach more than 10,000 restaurants by 2028.
“As McDonald’s China’s controlling shareholder, we are thrilled by McDonald's Corporation's continued commitment to our long-term partnership and the China market,” Yichen Zhang, chairman and CEO of CITIC Capital and chairman of McDonald's China, said in a statement.
Notably, this news comes on the heels of McDonald’s creation of the “One McDonald’s Way” strategy, examining “horizontal” ways of working across its global footprint by pulling learnings from each market. McDonald’s announced its Accelerating the Arches 2.0 plan in January that included some organizational restructuring and breaking down segment and market silos.
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