McDonald’s announces major franchise deal in China

McDonald’s has announced the sale of its Chinese operation, creating a new partnership to accelerate the growth of the company in mainland China and Hong Kong

The deal, worth $2.08bn and involving Citic Limited, Citic Capital Holdings, the Carlyle Group and McDonald’s Corporation, will see the new company act as the main franchisee in the region, responsible for McDonald’s businesses for a term of 20 years.

Once completed Citic and Citic Capital will hold the controlling stake of 52% while Carlyle and McDonald’s will hold 28% and 20% respectively.

“China and Hong Kong represent an enormous growth opportunity for McDonald’s,” said McDonald’s CEO Steve Easterbrook. “This new partnership will combine one of the world’s most powerful brands and our unparalleled quality standards with partners who have an unmatched understanding of the local markets and bring enhanced capabilities and new partnerships, all with a proven record of success. By working together, we will unlock even faster growth and be closer to the customers and communities we serve as McDonald’s works to be the leading quick service restaurant across the Chinese mainland and Hong Kong.”

The fast food giant is looking to benefit from a rapidly developing consumer sector in China, which is experiencing continued urbanisation, an expanding middle class and increasing disposable household incomes. The working population in China is larger than those of the US and Europe put together but the spending levels of the Chinese middle class is a fraction of those in more developed countries.

As it seeks to grow McDonald’s will focus on new openings in so-called tier three and tier four cities where the company sees great growth potential. It intends to open 1,500 new restaurants in China and Hong Kong over the next five years while also improving performance in existing restaurants, through menu innovation, delivery, and enhanced restaurant convenience.

Tina Nielsen

More Relevant

View More