US Fast-Food giant McDonald’s has announced a deal to sell 80% of its business in China and Hong Kong, as it aims to franchise most of its restaurants around the world.
According to reports, China’s government owned investment group Citic, and US private equity firm Carlyle Group, will take control of the operations in a transaction prized at $2.1 billion.
At the moment McDonald’s owns and runs about 65% of its 2,000 China outlets. Franchising lets it to take a slice of sales while dropping operating costs.
Meanwhile McDonald’s is working to restructure its worldwide operations, and altering its ownership structure to rotate more around franchises is a major part of that refurbishment.
Furthermore the company said last year in a statement that it was looking to find a partner to help it add more than 1,500 restaurants in China, Hong Kong and Korea over the next five years.
According to this deal agreed on Monday, the company plans to keep a 20% share in its China business. Citic will grasp a 52% share in the deal while Caryle takes 28% of the new business.
Moreover Yum Brands, the owner of KFC and Pizza Hut, is also reportedly streamlining its China business.
Both McDonald’s and Yum Brands have been facing ever growing competition from cheaper local rivals, predominantly in China, where they are trying to pull through the food safety scares.