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McDonald's Plans to Open 2000 More Restaurants in China

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McDonald's announced plans Tuesday to increase the number of restaurants in China from 2,500 to 4,500 within five years.

The company also announced completion of a partnership deal with Citic and Carlyle to sell a controlling interest in the fast-food company's China and Hong Kong operations for 20 years. That makes it the largest franchise outside the United States.

In January, McDonald's announced plans to sell 80 percent of its holdings in mainland China and Hong Kong for $1.67 billion to Citic and Carlyle. About 65 percent of McDonald's restaurants in mainland China are company-owned or operated.

Called Vision 2022, McDonald's projects 2,000 new Chinese locations in five years, which represents double-digit growth yearly. 

About 45 percent of the new restaurants will be located in smaller, poorer cities in China and 75 percent will provide take-out and delivery services.

"China will soon become our largest market outside of the United States," said Steve Easterbrook, McDonald's president and CEO. 

"We are excited to join forces with Citic and Carlyle for better localized decision-making to meet changing customer demands in this dynamic market.

"Mainland China and Hong Kong are leading the global system in capturing new consumer trends such as delivery and digitalization and its driving strong performance and growth momentum."

In 2016, more 1 billion customers visited McDonald's on the Chinese mainland. But its market share -- No. 2 in the nation -- has declined to 13 percent. Yum Brands' KFC and Pizza Hut is No.1 with 1.6 billion diners.

Last year, Yum! divested its China operations into a separate publicly traded company named Yum China Holdings.

In 1987, KFC became the first U.S.-based fast food chain to open a store in mainland China. McDonald's opened its first restaurant there in 1993.

"[McDonald's] sold to Citic really out of a position of weakness. You don't sell your entire China operation in the fastest consumer growing market because you're doing well," Shaun Rein, the managing director for Shanghai market consultancy CMR China told Financial Times. "In order for Citic and Carlyle to make money, they need to grow McDonald's faster." 

Last year, Starbucks announced plans to open more than one new store in China per day for the next five years and reach 5,000 stores by 2021.

McDonald's is the world's leading global food service retailer with more than 37,000 locations in more than 100 countries.

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