‘Two po­ten­tial buy­ers’ for McDon­ald’s China

China Daily (Hong Kong) - - BUSINESS - By ZHU WENQIAN zhuwen­qian@chi­nadaily.com.cn

McDon­ald’s Corp is re­ported to have nar­rowed the po­ten­tial buy­ers of its China fran­chise to State-owned CITIC Group Corp and US-based pri­vate equity firm Car­lyle Group LP, and an an­a­lyst said he is bullish on the po­ten­tial trans­ac­tion.

“The po­ten­tial pur­chase by CITIC and Car­lyle is a pos­i­tive in­cen­tive for McDon­ald’s, as this would boost the ex­pan­sion of its stores and its busi­ness scale, and stim­u­late the cap­i­tal mar­ket,” said Zhu Dan­peng, a re­searcher at the China Brand Re­search In­sti­tute.

“The ac­qui­si­tion would greatly as­sist McDon­ald’s ex­pan­sion in third- and fourth-tier cities in China, and boost its lo­cal­iza­tion strate­gies.”

But McDon­ald’s China re­fused to com­ment on the de­tails of the deal.

McDon­ald’s plans to sell its stores in the Chi­nese main­land and Hong Kong, with a re­ported trans­ac­tion value of $2 bil­lion. The fast-food chain said there isn’t any de­tailed sched­ule on the deal, and it will an­nounce the de­tails once they have been con­firmed.

Since the an­nounce­ment that McDon­ald’s would in­tro­duce strate­gic in­vestors to its China fran­chise in March, many Chi­nese en­ter­prises, in­clud­ing Bei­jing Tourism Group and San­power Group, have shown their in­ter­est in mak­ing an in­vest­ment.

Since en­ter­ing the Chi­nese main­land in 1990, McDon­ald’s now op­er­ates more than 2,200 stores in the main­land. Yet, with an emerg­ing mid­dle class and their ris­ing in­come, some lo­cal cater­ing chains and for­eign cafe chains are tak­ing cus­tomers away from fast­food op­er­a­tors.

From July to Septem­ber, McDon­ald’s saw its net profit fall by 3 per­cent in the Chi­nese main­land year-on-year, ac­cord­ing its earn­ings re­port.

McDon­ald’s is up­grad­ing its hard­ware and the over­all cus­tomer ex­pe­ri­ence to at­tract more din­ers. In early De­cem- to ber, McDon­ald’s up­graded its first restau­rant in Shen­zhen with im­prove­ments to its dig­i­tal hard­ware and of­fer­ing more per­son­al­ized prod­ucts.

The up­grad­ing in­cludes the launch of a sep­a­rate or­der­ing and pickup ar­eas, a touch­screen or­der­ing ma­chine with a per­sonal touch for cus­tomers to fine-tune their or­ders, such as “no ice” for drinks or “no sauce” for burg­ers. In ad­di­tion, McDon­ald’s changed its menus to live screens with a com­bi­na­tion of pictures, videos and words, and stores can change their pre­ferred menus.

By the first half of 2017, the fast-food chain said it is es­ti­mated that ap­prox­i­mately 1,000 restau­rants in 13 cities na­tion­wide will com­plete their hard­ware up­grade, ac­count­ing for 40 per­cent of its out­lets in the Chi­nese main­land.

“With the rise of dig­i­tal­iza­tion and O2O de­vel­op­ment, the life­style of Chi­nese con­sumers has been chang­ing con­stantly. We plan to de­liver bet­ter ex­pe­ri­ences at our restau­rants, and put more choice and con­trol in the hands of our cus­tomers,” said Phyl­lis Che­ung, CEO of McDon­ald’s China.

McDon­ald’s archri­val Ken­tucky Fried Chicken launched its first ar­ti­fi­cial in­tel­li­genceen­abled store in Bei­jing last week, and the com­pany said it planned to fur­ther ex­pand its lay­out of smart restau­rants.

JIANG DONG / CHINA DAILY

A man in Ron­ald McDon­ald cos­tume per­forms at an McDon­ald’s out­let in Shen­zhen, Guang­dong prov­ince.

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