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McDonald's Partners With CITIC, Carlyle; Sees Double-digit Sales Growth In China

McDonald's Corp. (MCD) announced Tuesday its growth plan for China following completion of a strategic partnership with CITIC Limited, CITIC Capital Partners, and The Carlyle Group (CG).

The new partnership, which will operate and manage McDonald's businesses in mainland China and Hong Kong, announced a series of development initiatives for mainland China. The "Vision 2022" strategy aims to drive double-digit sales growth in each of the next five years by increasing the number of restaurants from 2,500 to 4,500. This includes delivery hub coverage of over 75% of restaurants, by the end of 2022.

Opening pace of new McDonald's restaurants in mainland China is expected to progressively ramp up to 500 per year in 2022 from approximately 250 per year in 2017 under the new partnership.

In addition, Vision 2022 includes plans to increase significantly McDonald's restaurant portfolio mix in tier 3-4 cities to approximately 45% of all McDonald's restaurants in China. Vision 2022 also includes an increase of "Experience of the Future" restaurants to over 90%, which will enable the brand to offer digitalized and personalized dining experience to more customers.

The transaction has obtained China's regulatory approval and was completed on July 31, creating the largest McDonald's franchisee outside of the United States. The sale to the new McDonald's China franchisee includes McDonald's existing businesses in Mainland China of approximately 2,500 restaurants and Hong Kong of approximately 240 restaurants.

Steve Easterbrook, McDonald's President and CEO, said, "China will soon become our largest market outside of the United States. We are excited to join forces with CITIC and Carlyle for better localized decision-making to meet changing customer demands in this dynamic market."

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