Jan 08, 2020 (China Knowledge) - After over two years of buying into China’s McDonald, state-owned conglomerate CITIC Ltd is seeking to reduce its stake in the popular fast-food chain due to the waning profitability of the franchise from rising costs. CITIC is currently looking out for buyers for a 22% stake, lowering its stake to 10%. The bottom price for the stake is set at RMB 2.17 bln with the bidding process still ongoing.

However, CITIC Capital Holdings Ltd., which currently owns a 20% stake in Mcdonald’s China, is interested in buying the stake. “CITIC Capital is confident with the future growth and prospects of the business and we’re actively participating in the bidding process,” said the buyer’s Hong Kong-based spokeswoman.

Revenue for the McDonald’s China master franchiser, Fast Food Holdings Ltd, was RMB 24.8 billion in 2018, based on CITIC’s disclosure document. Operating revenue for the first 11 months of 2019 was RMB 16.2 bln and net revenue for the same period reached RMB 856.2 mln, according to the statement. This is compared to RMB 16.4 bln and RMB 1.15 bln respectively, in 2018.

McDonald China says the comparable store sales have increased for three years consecutively since CITIC and its partners bought over the franchise in 2017.

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