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The Food Institute Blog

McDonald's Sells Majority Stake in its China Business
Posted on January 09, 2017 by Chris Campbell

McDonald's has done a lot of work to turn around its business in the U.S. in recent years, and the company is now making moves to turn around its fortunes overseas.

The company reached a nearly $2.1 billion deal with CITIC and the Carlyle Group to sell a majority stake in the company. CITIC and CITIC Capital will own a controlling stake of 52% in the new entity, with the Carlyle Group holding 28%. McDonald's will retain a 20% stake in the company.

CITIC expects to open some 1,500 McDonald's locations across the Chinese mainland and Hong Kong in the next five years. The purchase deal means that McDonald's is franchising all of its 2,600-plus stores in the Chinese mainland and Hong Kong, representing a major step in turning around its fortunes in Asia. The franchising efforts are also expected to cut costs.

McDonald's believes that these efforts could unlock growth potential in the country's 3rd and 4th tier cities. It expects that new restaurant openings, in addition to improving performance at its existing stores, will be the key to unlocking growth in the region.

"Financial strength is very important to accelerating openings in China. Besides, CITIC's real estate networks and strategic alliances with developers including Vanke and China Resources may potentially open up more opportunities," McDonald's China CEO Phyllis Cheung told China Daily.

 

About the Author

Chris Campbell
Business Writer
The Food Institute

Chris focuses on fresh, canned and frozen fruit and fresh and dried vegetables for the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He is a proud Rutgers University alumnus with a degree in English, and has a background in web writing for a variety of industries, including legal, foodservice and small-to-medium sized businesses. In his downtime you can find him watching New York Yankees baseball, hiking, enjoying live music and spending time with his dog Kaiden. He invites you to contact him via email at chris.campbell@foodinstitute.com to talk about anything food-related.

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