--- title: "McDonald's to Sell Its China Business" description: "From Coca-Cola and KFC to McDonald's, foreign companies are selling their China operations—are they struggling in China? According to foreign media reports, McDonald's has decided to sell its China business to CITIC Group and Carlyle Group, making it another foreign restaurant chain with Chinese backing after Coca-Cola and Yum! Brands (which owns KFC and Pizza Hut)." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-12-26" language: "en" canonical: "https://xinjignxiao.com/en/articles/mcdonald-s-to-sell-its-china-business-75a49eb9/" markdown: "https://xinjignxiao.com/en/articles/mcdonald-s-to-sell-its-china-business-75a49eb9.md" original_source: "https://mp.weixin.qq.com/s/oKxrzGCI-OpQikaw_25IbA" translation: "https://xinjignxiao.com/zh/articles/%E9%BA%A6%E5%BD%93%E5%8A%B3%E4%B9%9F%E8%A6%81%E5%87%BA%E5%94%AE%E4%B8%AD%E5%9B%BD%E4%B8%9A%E5%8A%A1%E4%BA%86-75a49eb9.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/mcdonald-s-to-sell-its-china-business-75a49eb9/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # McDonald's to Sell Its China Business > From Coca-Cola and KFC to McDonald's, foreign companies are selling their China operations—are they struggling in China? According to foreign media reports, McDonald's has decided to sell its China business to CITIC Group and Carlyle Group, making it another foreign restaurant chain with Chinese backing after Coca-Cola and Yum! Brands (which owns KFC and Pizza Hut). From Coca-Cola and KFC to McDonald's, are foreign companies selling their China operations because they can't survive in China? According to foreign media reports, McDonald's has decided to sell its China business to CITIC Group and Carlyle Group, making it another foreign restaurant chain with Chinese backing after Coca-Cola and Yum! Brands (which owns KFC and Pizza Hut). Seeing this, onlookers marvel at the boldness of Chinese capital's "buy, buy, buy" spree, but also wonder: why are foreign companies choosing to sell their China operations this year, from Coca-Cola and KFC to McDonald's? Are they struggling in China? 1. **McDonald's China Business Has Been the Subject of Constant Rumors** According to Nikkei Chinese, McDonald's has decided to sell its China business to CITIC Group and Carlyle Group. The sale includes stores in mainland China and Hong Kong, with an estimated transaction value exceeding $2 billion, and an official announcement is expected early next year. At the end of March this year, McDonald's announced plans to introduce strategic investors in mainland China and Hong Kong. At that time, McDonald's China stated that the introduction of strategic investors was mainly to achieve the goal of franchised restaurants accounting for 95% of its total. Since then, many Chinese companies have joined the competition for McDonald's China franchise rights, including China Cinda, Sanyuan Foods, and Sanpower Group, all of which have submitted bids. Interestingly, Quanjude also had "rumors" with McDonald's. In July this year, four senior executives at Quanjude resigned, and some media reported that it was related to the bidding for McDonald's China business. Quanjude issued a statement denying this. 2. **How Does McDonald's Profit After Selling Its China Business?** **McDonald's is selling the franchise rights for mainland China and Hong Kong. So what does franchising mean? This requires an explanation of McDonald's business model.** It is understood that McDonald's franchise model is not the traditional store加盟 model. According to Beijing Youth Daily, McDonald's business abroad is more about investment and operation rather than service operation. That is, after selecting a location and opening a store, they operate it until it reaches a healthy state and then sell it. The profit from this is much greater than that from stores they operate themselves. In other words, catering is not McDonald's main business. In this regard, McDonald's founder Ray Kroc vividly described this profit model as: "I'm not in the hamburger business; my real business is real estate." However, McDonald's has not successfully replicated this model in China, so it is eager to change the status quo in the Chinese market and extricate itself from catering operations as much as possible. Not only McDonald's, but also KFC under Yum! Brands uses the "franchise" model. According to Beijing Youth Daily, KFC and McDonald's franchise fees are similar, with a transfer fee of up to 8 million yuan per restaurant. Subsequent ongoing operating costs include a franchise royalty fee of 6% of sales and an advertising allocation fee of 5% of sales. 3. **Chinese Capital, Not Short of Money, Also Bought KFC and Coca-Cola** **For foreign restaurant companies, McDonald's selling its China business is not an isolated case; Yum! Brands and Coca-Cola have also made similar moves.** In September this year, Yum! Brands, the parent company of KFC and Pizza Hut, announced that Yum China would be spun off from Yum! Brands and listed on the New York Stock Exchange as an independent company. At the same time, the spun-off Yum China would receive a total investment of $460 million from Primavera Capital and Ant Financial. This means that Yum! Brands has sold the Chinese market operations of KFC and Pizza Hut to two Chinese acquirers. Interestingly, Ant Financial's investment in Yum China also sparked a joke about "Ma Yun's revenge." There is a rumor that when Ma Yun was young, he applied to KFC and was rejected. As a result, netizens jokingly referred to this investment as a "revenge story," and major media outlets labeled it "Ma Yun's revenge." The dramatic story of "a gentleman's revenge is never too late" spread widely on social media. In addition, in November this year, Swire Pacific and China Foods, a subsidiary of COFCO, announced that Coca-Cola's bottling operations in China would be operated by two franchise partners, COFCO and Swire. According to Yicai.com, after the restructuring, in mainland China, COFCO will own and operate 18 bottling plants, and Swire will own and operate 17 bottling plants. 4. **Question: Are Foreign Restaurant Chains Doing Poorly in China?** **Why are foreign restaurant chains selling their China operations? This may be related to their difficult situation in the Chinese market.** According to Time magazine, after the Shanghai Husi incident in 2014, McDonald's same-store sales in China fell for four consecutive quarters. According to McDonald's financial reports, in 2015, McDonald's revenue and net profit were $25.41 billion and $4.53 billion, respectively, down 9.6% and 19% from 2013. Its financial analysis also pointed out that the decline in revenue in high-growth markets was mainly due to the negative impact of poor performance in China and Russia. Similarly, Yum! Brands, which was also affected by the Shanghai Husi incident, did not fare well. According to Beijing Youth Daily, after the Shanghai Husi incident was exposed, Yum China's same-store sales fell by 16% in the third quarter of 2014, and continued to decline by double digits in the following three quarters. The second-quarter financial report of Parkson (likely a typo for Yum China) released in July this year showed that KFC China's same-store sales increased by 2% year-on-year, but this was actually a slow climb from the low base of last year's trough, while Pizza Hut's same-store sales in China shrank by 11%. In addition, Coca-Cola, which was taken over by Swire and COFCO, also performed poorly. According to National Business Daily, Coca-Cola's second-quarter results showed that revenue fell 5.1% year-on-year to $11.54 billion, with the decline mainly dragged by the Asia-Pacific region, especially the Chinese market. 5. **Chinese Capital Takes Over: What Is the Current Situation of Foreign Restaurant Chains?** **Foreign capital withdraws, Chinese capital takes over. What is the current situation of these foreign restaurant chains?** As for Yum China, some believe that the real intention of Primavera Capital and Ant Financial is not to directly participate in the catering industry, but rather to leverage their existing businesses to achieve profitability through a new expansion model. In this regard, Ant Financial issued a statement saying, "Our goal is to help Yum China provide world-class mobile payment services to the tens of millions of consumers of its brands." After Ant Financial invested in Yum! Brands, KFC officially opened a store on Tmall in September. Coca-Cola, after announcing the restructuring, encountered "employee rights protection." According to Legal Weekend, due to concerns about the impact on their rights after the Chinese enterprise takeover, employees at bottling plants in multiple locations submitted petitions to Coca-Cola (China), involving issues such as employee treatment after the equity transaction and "buyout of seniority." Employee work stoppages occurred at plants in Chengdu, Chongqing, and Jilin. Currently, Coca-Cola plants across the country have resumed normal production, and the matter has temporarily subsided. However, employees' demands have not been directly addressed, and some employees have said they will continue to negotiate with headquarters to fight for their due interests. **Weibo Hot Discussion:** **@四瓶倾年 (Corporate Weibo):** Then let's start with the rise of Shaxian Snacks! **@魏耀欣 (Self-media):** McDonald's selling its China business?! To be honest, I haven't been to McDonald's in years, but I still occasionally go to KFC... **@多多队长 (Designer):** In the past, eating at McDonald's was a luxury, but now I almost never go. **@ccc先森丶 (Engineer):** As someone who travels frequently, I can say that when catching trains, high-speed rails, or planes, if I have any time, I'll eat some noodles or Chinese food. Only when I really don't have time do I grab a burger or something. To be honest, people over 20 around me rarely like these foods anymore. **@Ang永远的爱 (Weibo user):** Really, people don't like these foods anymore. When they first entered China, people ate them out of novelty. In fact, these foreign junk foods don't match Chinese tastes. Now that the novelty has worn off, who would eat them? Every time I eat them, I feel nauseous and uncomfortable. It's better to have a bowl of wonton or noodles. -END- ★ Click the blue links below to view popular articles this month ★ Click the blue links below to view original articles this month **FMCG Industry's Most Professional and Practical Knowledge Base** **【 Reply with yellow numbers in the background to view the following keywords 】** | **001** Excellent article selection | **002** Dealer market operations | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales volume improvement techniques | **006** Channel expansion | **007** Managing dealers | **008** Dealer development | **009** Dealer internal operations management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's eighteen skills | **013** KA operation methods and strategies | **014** First lesson for new salespeople | **015** Internet, brands | **016** Dealer B2B transformation | --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671