When Beijing’s first McDonald’s outlet opened near Tiananmen Square in 1993, about 40,000 people queued round the block to place an order, a sign of the country’s voracious appetite for fast food that would propel China to become the company’s third-biggest market by number of outlets, trailing only the US and Japan.
But a quarter of a century later the Golden Arches have lost some of their lustre for Chinese consumers, and amid falling sales McDonald’s on Monday sold control of 2,700 China restaurants to a consortium led by a state-run investor Citic. The $2.1bn deal follows KFC owner Yum Brands’ spin-off of its much larger China operations in October.
While both groups will continue to receive royalties from Chinese sales, analysts say ceding control of assets and handing decisions to local management will allow the brands to expand more rapidly and localise more nimbly in a crucial market.