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The operator of McDonald’s restaurants in China has raised about $2 billion in bank loans to free up liquidity that will help operate the business, according to people familiar with the matter, as the country maintains its zero-tolerance approach to fighting Covid-19.
Chinese state-backed Citic Ltd., Citic Capital and US private equity firm Carlyle Group Inc. acquired control of the fast food chain’s mainland China and Hong Kong operations from McDonald’s Corp. in 2017, valuing the business at as much as $2.1 billion.
McDonald’s China’s delivery services have grown over the past two years even amid on-and-off lockdowns in mainland China, the people said. The delivery business now contributes about 30% of its total sales, one of the people said.
A representative for Citic Capital declined to comment, while McDonald’s China didn’t immediately respond to requests for comment.
The number of McDonald’s China outlets has roughly doubled since the deal. The company operated 4,395 stores in China and 247 in Hong Kong as of the end of 2021, its website shows. It is on track to open about 800 stores in China this year, McDonald’s Corp. Chief Financial Officer Ian Borden told analysts on the company’s third quarter earnings call last month.
China’s regime of lockdowns, mass testing and centralised quarantine shows no outward sign of being wound down, despite an economy in the doldrums and governments in other countries having broadly removed pandemic restrictions in recent months. Officials must be committed to Covid Zero and the work of controlling the virus, the National Health Commission said in a statement.
Covid Zero is disruptive not only to McDonald’s in China but consumer confidence in the country’s broader macroeconomic environment, McDonald’s Corp. Chief Executive Officer Chris Kempczinski acknowledged during the analyst call.
“Long-term, our outlook on China remains very bullish,†Kempczinski said. “We’re going to continue to build restaurants at an aggressive pace.â€
—Bloomberg