In efforts to revamp its franchise in the international market, McDonald’s will sell at least 80 percent of its business in Hong Kong and throughout China. McDonald’s already operates and estimated 65 percent of the 2,000 outlets it owns in China. This new move will help McDonald’s build its franchising worldwide.
McDonald’s announced that it was on the lookout for partners to create over 1,500 restaurants in China and Korea within the next five years. Citic, China’s investment group, along with the U.S. firm Carlyle Group agreed to a deal with an estimated value of $2.1 billion. The benefits of franchising will allow McDonald’s to cut the cost of sales as well as operating costs.
On Monday, both parties signed an agreement that would give McDonald’s 20 percent stake in China’s business. Citic holds 52 percent while Carlyle will take the remaining 28 percent.
McDonald’s isn’t the only restaurant brand to head to China for business. Yum Brands, who owns KFC and Pizza Hut are also researching business in China. Yum Brands and McDonald’s, although they are rivals, have competition from other local businesses. This competition can especially be found in China where there have been a large amount of food safety scares.
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