The Golden Arches is selling the bulk of its business in China to CITIC and Carlyle Group. As Fred Katayama reports, it's part of a trend of selling and refranchising stores.
McDonald's is seeking to grow in China and Hong Kong by selling the bulk of its business there. The buyers: the Chinese state-owned enterprise, CITIC, and the private equity firm Carlyle Group. The 20-year deal values that business at up to $2.1 billion. The new partnership plans to open 1500 new restaurants in the next five years to add to the 2600 already there. Restaurant chains like McDonald's have recently been selling and refranchising their stores so they can free up capital and not have to deal with issues like real estate and personnel. In October, Yum Brands, the largest fast-food chain in China, spun off its KFC and Pizza Hut restaurants there. China Market Research Group managing director Shaun Rein said, "I'm not sure how much more you can do with McDonald's in China. They're a well-run company, so I'm not sure that CITIC and Carlyle are able to add that much more aside from capital." McDonald's will retain a 20 percent stake in the partnership. A source told Reuters the company decided to keep some skin in the game so it can benefit from future growth in China.