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.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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