McDonalds Sells the Majority of Its Stake in China for $2.1 Billion

12:49 pm
1 Brooke Stevens
McDonald’s gives up most of its Chinese operations to local CITIC, in hopes to regain financial success in China.

McDonald’s has decided to sell most of its Chinese operations. The highly popular American fast food chain has announced that it will be giving up 80% of its stake in the secosnd largest economy in the world, as part its overall attempts to change. As part of the deal, estimated in $2.1 Billion, 52% of McDonald’s stake will be bought by CITIC Ltd., a Chinese, Hong-Kong-based conglomerate; and, 28% will be bought by The Carlyle Group, which is an American private equity company.

McDonald’s CEO, Steve Easterbrook, has been inserting various improvements in the chain as a whole, as part of an overall process. Other than the decision of franchising, the fast food chain has undergone several other improvements, such as the change of its menu structure and its food ingredients, changes in customer service and the addition of touch screens. According to the company, its Chinese customers are soon to experiences these improvements themselves.

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The deal is a part of the food company’s goal to better understand and operate in the Chinese market, which has been experiencing an economic deceleration recently. McDonald’s is not the first American food chain to initiate this type of deal in the last two years. The American YUM, owner of KFC and Pizza Hut, had also conducted a structural change in its Chinese operations last year. Both competitors appear to have been similarly affected by the negative change in the Chinese economy.

It appears that in selling most of its stake in the eastern county, McDonald’s is driven by the rather logical assumption that a local company could do a better, more efficient job in getting the attention of local audience. The ability to admit that and let CITIC work its magic – is definitely an admirable business quality, one that would hopefully get the American fast food chain back on track to success in China.

 

MCDONALD’S

With 35,000 outlets spread across 119 countries, McDonald’s serves an average of 68 million customers on a daily basis. As pioneers of drive-thru restaurants and Chicken McNuggets, McDonald’s has come a long way since the first branch was established in 1940.

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