McDonald’s announced Monday that it’s bolstering its investment in China, the brand’s second-largest market behind the U.S.
The burger giant agreed to acquire the minority ownership stake of global investment firm The Carlyle Group. When the deal is finalized, McDonald’s will boost its stake from 20 percent to 48 percent, while China-based CITIC Capital—an alternate investment management and advisory company—still controls 52 percent.
In 2017, McDonald’s sold its China business for $2.08 billion and started a partnership with CITIC Capital and Carlyle. The goal was to nearly double the footprint from 2,500 to 4,500 by 2022. The market ended Q3 with 5,582 restaurants, up from 4,905 in the year-ago period. The U.S. and China are the only markets with more than 3,000 units. The next closest is Japan at 2,967. Additionally, China’s systemwide sales have grown more than 30 percent year-to-date since 2019.
“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,” CEO Chris Kempczinski said in a statement.
The updated objective is to reach 10,000-plus restaurants by 2028.
Yichen Zhang, chairman and CEO of CITIC Capital and chairman of McDonald’s China, said the company is “more confident than ever in our ability to serve the Chinese consumer with McDonald’s iconic taste.”
“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,” Zhang said in a statement.
Kempczinski told investors in October that China faced a slowing macroeconomic environment and historically low consumer sentiment in the third quarter. To mitigate these headwinds, the market relaunched a campaign with small price-pointed bundles featuring burgers. The promotion was designed to engage Gen Z consumers, drive meaningful customer demand, and increase beef share in China.
In China, 90 percent of business comes through digital channels. Kempczinski noted earlier this year that the country is “making tremendous progress in running the restaurants more efficiently, all with the use of data and technology” and that this would “provide great learnings for the rest of our system.”
McDonald’s has more than 40,000 restaurants in 100-plus countries. Of that, about 95 percent are franchised. The brand ended Q3 with 13,459 U.S. restaurants, including 12,700 franchised units and 689 corporate stores. Internationally there were 27,739 restaurants. Global comps increased 11.7 percent in the third quarter. International Developmental Licensed Markets, which includes China, saw comps grow 10.5 percent in the quarter.
