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Ford is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
Ford announced the facility in February. It quickly became a political target due to a licensing deal with Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL.
The company said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs.

Ford CEO Jim Farley announces at a press conference that Ford Motor Company will be partnering with the worlds largest battery company, a China-based company called Contemporary Amperex Technology, to create an electric-vehicle battery plant in Marshall, Michigan, on February 13, 2023 in Romulus, Michigan.
Bill Pugliano | Getty Images News | Getty Images

DETROIT – Ford Motor is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
Ford executives including CEO Jim Farley and Chair Bill Ford initially announced the facility in February. It quickly became a political target due to its connection to Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL. The plant is a wholly owned Ford subsidiary, but the U.S. automaker is licensing technology from CATL to produce new lithium iron phosphate, or LFP, batteries for EVs.

Ford said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs. The company declined to disclose how much less it would invest in the plant. Based on the reduced capacity, it would still be about a $2 billion investment.
The decision adds to a recent retreat from EVs by automakers globally. Demand for the vehicles is lower than expected due to higher costs and challenges with supply chains and battery technologies, among other issues.
Reductions at the Marshall, Michigan, plant are part of Ford’s plans announced last month to cut or delay about $12 billion in previously announced EV investments. The company will also postpone construction of another electric vehicle battery plant in Kentucky.

Ford Motor Co., Chief Executive Bill Ford announces Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan, February 13, 2023.
Rebecca Cook | Reuters

“We looked at all the factors. Those included demand and the expected growth for EVs, our business plans, our product cycle plans, the affordability and business to make sure we can make a sustainable business out of this plant,” Ford Chief Communications Officer Mark Truby said during a media briefing. “After assessing all that, we are now good to confirm that we’re moving forward with the plant, albeit in a slightly smaller size and scope than what we originally announced.”
Truby said the plant is still expected to open in 2026, even though the company halted production of the facility for roughly two months during collective bargaining with the United Auto Workers. The talks ended last week as Ford-UAW employees ratified a deal that included significant wage increases and a path for battery workers at the plant to be included under the record agreement, if organized by the union.

The UAW did not immediately respond for a request for comment.

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Increased labor costs factored into Ford’s decision to scale back the plans, according to Truby. Ford CFO John Lawler last month said the new deal would add $850 to $900 per vehicle assembled in labor costs.
Lawler declined to estimate how much the deal, which runs through April 2028, will cost the company. Deutsche Bank estimated the increase to be $6.2 billion during the terms of the deal.
“We’re still very bullish on EVs and our EV strategy, but clearly, while there is growth, both in the U.S. and worldwide, clearly, the growth isn’t at the rate that we and others had expected,” Truby said. “We’re trying to be smart about this and how we move forward.”
The plant has received political pushback from federal and local officials, including protests by residents in the rural Michigan city. U.S. lawmakers also have sought to review the licensing deal between Ford and CATL amid heightened tensions between the U.S. and China.
Truby reiterated Tuesday that the company still believes it’s better business for the company and U.S. to license the technology instead of importing batteries from overseas. The plant is expected to be the first in the U.S. to produce LFP batteries.
The lithium iron phosphate, or LFP, batteries the plant will produce are instead of pricier lithium-ion or nickel cobalt manganese batteries, which Ford is currently using. The new batteries are expected to offer different benefits at a lower cost, and allow Ford to increase EV production and profit margins.
Ford, which is currently sourcing LFP batteries from CATL, follows Tesla in using LFP batteries in a portion of its vehicles in part to reduce the amount of cobalt needed to make battery cells and high-voltage battery packs.
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Dick’s Sporting Goods raised its full-year outlook after slashing it in the prior quarter over theft concerns.
The athletic goods retailer, known for its wide expanse of branded products and sports equipment, said it’s “excited” for the holiday shopping season.
In the prior quarter, Dick’s shocked investors when it blamed a 23% drop in profits on theft and markdowns.

A Dick’s Sporting Goods store stands in Staten Island on March 09, 2022 in New York City.
Spencer Platt | Getty Images

Shrink who? 
Sales and profit at Dick’s Sporting Goods bounced back in the fiscal third quarter, leading the retailer to raise its full-year guidance Tuesday after it shocked investors earlier this year when it slashed its outlook over theft concerns.

Dick’s beat Wall Street’s estimates on the top and bottom lines for the period. In a news release, the company said it’s “excited” for the holiday season after seeing “strong” back-to-school sales. 
Dick’s shares jumped more than 8% in premarket trading after the news.
Here’s how the athletic goods retailer performed during its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $2.85, adjusted, vs. $2.44 expected
Revenue: $3.04 billion vs. $2.94 billion expected

The company’s reported net income for the three-month period that ended Oct. 28 was $201 million, or $2.39 per share, compared with $228 million, or $2.45 per share, a year earlier. Excluding one-time items, Dick’s saw earnings per share of $2.85. 
Sales rose to $3.04 billion, up about 2.8% from $2.96 billion a year earlier.

For the full year, the company now projects earnings per share to be between $11.45 and $12.05, compared with the $11.27 to $12.39 range that analysts had expected, according to LSEG. Dick’s raised its guidance from a prior range of $11.33 to $12.13. But it still falls below the original outlook the company set earlier this year, when it said it expected earnings of $12.90 to $13.80.
Dick’s also raised its comparable sales outlook slightly and expects them to be up between 0.5% and 2%, compared with a previous range of flat to up 2%. Much of that range would top the 0.7% increase that analysts had expected, according to StreetAccount. 
Dick’s didn’t immediately share further details on its holiday forecast. But since it only slightly raised its same-store sales outlook despite the strong third-quarter beats, Dick’s appears somewhat cautious entering the holiday season, mirroring sentiment from other retailers that are concerned demand will be tepid.
When Dick’s reported fiscal second-quarter earnings over the summer, its stock plummeted 24% after it blamed theft and aggressive markdowns for a staggering 23% drop in profits. Upticks in “organized retail crime and theft in general” – plus aggressive markdowns to clear out excess inventory – contributed to the profit loss. The company said it would impact its guidance for the year. 
While earnings guidance at Dick’s is still below the range it originally set for itself, strong sales during the back-to-school months led the company to raise its outlook and strike a positive tone for the crucial holiday shopping season. 
“We are pleased with our third quarter results. With our best-in-class athlete experience and differentiated assortment, we had a very strong back-to-school season and continued to gain market share as consumers prioritize DICK’S Sporting Goods to meet their needs,” President and CEO Lauren Hobart said in a news release. “As a result of our strong Q3 performance, we are raising our full year outlook, which balances the confidence we have in our key strategies with an acknowledgment of the uncertain macroeconomic environment. We’re excited for the upcoming holiday season and the product, service and experience we are providing to our athletes.”
Read the full earnings release here.
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People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.
Andrew Kelly | Reuters

Best Buy cut its full-year sales outlook Tuesday, as the company weathers a period of cooler demand and prepares for price-conscious holiday shoppers.
The consumer electronics retailer beat Wall Street’s quarterly earnings expectations, but fell short on revenue.

Best Buy said it now expects revenue to range from $43.1 billion to $43.7 billion for the fiscal year, down from its previous range of between $43.8 billion to $44.5 billion. The retailer said it expects comparable sales to decline by between 6% and 7.5%, lower than its previous guidance of a 4.5% to 6% drop.
It also lowered the high end of its profit guidance, saying it expects adjusted earnings per share to range from $6 to $6.30 instead of between $6 and $6.40.
CEO Corie Barry said in a news release that Best Buy anticipated softer sales of consumer electronics this year. But with an economic backdrop marked by high inflation and the Federal Reserve’s campaign to cool down spending, she said consumer demand “has been even more uneven and difficult to predict.”
She said the retailer is ready for the holiday season and “prepared for a customer who is very deal-focused with promotions and deals for all budgets.”
Here’s how the company did for the fiscal third quarter, compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $1.29 adjusted vs. $1.18 expected
Revenue: $9.76 billion vs. $9.90 billion expected

Best Buy, like home improvement retailers, is seeing demand moderate as it follows years of increased purchases of computer monitors, home theaters, and appliances during the Covid pandemic. Barry previously told investors that she expected this fiscal year to be “the low point in tech demand” before purchases pick up again.
In the three-month period that ended Oct. 28, Best Buy said net income dropped to $263 million, or $1.21 per share, from $277 million, or $1.22 per share, in the year-ago period. Revenue fell from $10.59 billion a year earlier.
Comparable sales, an industry metric that includes sales online and at stores open at least 14 months, fell by 6.9% year over year and 7.3% in the U.S., as shoppers bought fewer appliances, computers, home theaters and mobile phones. The company said it did see sales growth in gaming.
The company’s online sales declined by 9.3% in the U.S.
Even as it saw lower demand for merchandise, Best Buy drove higher profitability as it made money from its annual membership program, sold products with more favorable margins and had lower supply-chain costs.
Shares of Best Buy closed at $68.11 on Monday. So far this year, the company’s stock has tumbled about 15%, underperforming the 18% gains of the S&P 500 during the same period.
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Lowe’s lowered its full-year sales and earnings guidance, after weaker-than-expected spending on do-it-yourself projects.
The home improvement retailer missed Wall Street’s quarterly sales expectations for the fiscal third quarter.
Like its rival Home Depot, Lowe’s is facing cooling demand as Americans’ huge, pandemic-fueled appetite for home improvement moderates.

An exterior view of a Lowe’s home improvement store. Lowe’s Companies, Inc. reports quarterly earnings on Tuesday, May 23, 2023. 
Paul Weaver | Lightrocket | Getty Images

Lowe’s on Tuesday lowered its full-year sales outlook, after customers spent less on do-it-yourself projects and caused its fiscal third-quarter sales to tumble nearly 13% year over year.
The home improvement retailer said it now anticipates sales will total about $86 billion for the fiscal year. It had previously expected a range of $87 billion to $89 billion. It projects comparable sales will drop by about 5% this fiscal year, worse than a previously anticipated a decline of between 2% and 4%. The company expects adjusted earnings per share to be about $13, lower than its previously expected range of $13.20 to $13.60.

In a news release, CEO Marvin Ellison said Lowe’s felt a “greater-than-expected pullback” by customers on discretionary projects and big-ticket purchases. Yet he said its sales to home professionals, which are accounting for a growing share of its revenue, rose in the quarter. Those pros drive about 25% of its business.
He said the company, which sells Christmas trees and decorations, will next focus on “offering value and convenience this holiday season.”
Here’s how Lowe’s did for the fiscal third quarter ended Nov. 3:

Earnings per share: $3.06, it was not immediately clear if it was comparable to the $3.03 analysts expected, according to consensus estimates from LSEG, formerly known as Refinitiv
Revenue: $20.47 billion vs. $20.89 billion expected

Lowe’s, like its larger rival Home Depot, faces cooling demand as Americans’ huge, Covid pandemic-fueled appetite for home improvement moderates and higher mortgage rates inject more uncertainty into the housing market.
Ellison warned on an earnings call in August that a pullback in spending on DIY projects would be “the overall theme of how we see the second half of the year.” But he stressed that long term, the home improvement market had bright prospects because of limited housing stock and older average age of homes across the U.S.

In the fiscal third quarter, Lowe’s net income was $1.77 billion, or $3.06 per share, compared with $154 million, or 25 cents per share in the year-ago period. That quarter included a $2.1 billion impairment charge as the company left the Canadian market.
Net sales fell from $23.48 billion a year earlier.
Lowe’s competitor, Home Depot, beat Wall Street’s fiscal third-quarter earnings and revenue expectations last week, even as its sales fell 3% year over year. Home Depot said customers are still fixing up their homes, but noticed for the past several quarters that more of them are taking on smaller and less pricey projects.
Home Depot Chief Financial Officer Richard McPhail also said “the worst of the inflationary environment is behind us.”
Shares of Lowe’s have risen about 3% so far this year, but have trailed the approximately 18% gains of the S&P 500. The company’s stock closed Monday at $204.44, bringing Lowe’s market value to nearly $118 billion.
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“The mission continues,” tweeted Sam Altman, the co-founder of OpenAI, the startup behind ChatGPT, on November 19th. But precisely where it will continue remains unclear. Mr Altman’s tweet was part of an announcement that he was joining Microsoft. Two days earlier, to the astonishment of Silicon Valley, he had been fired from Openai for not being “consistently candid in his communications with the board”. Then Satya Nadella, Microsoft’s boss, announced that Mr Altman would “lead a new advanced AI [artificial intelligence] research team” within the tech giant. At first it looked like Mr Altman would be accompanied by just a few former colleagues. Many more may follow. The vast majority of OpenAI’s 770 staff have signed a letter threatening to resign if the board fails to reinstate Mr Altman.The shenanigans involving the world’s hottest startup are not over. The Verge, a tech-focused online publication, has reported that Mr Altman may be willing to return to OpenAI, if the board members responsible for his dismissal themselves resign. Mr Nadella also seems to allow for that possibility. His manoeuvring could look shrewd either way. If Mr Altman returns, then Microsoft, Openai’s biggest investor, would have supported him at a time of crisis, strengthening an important corporate relationship. If Mr Altman and friends do join Microsoft, Mr Nadella could look even smarter. He would have brought in house the talent and technology that the world’s second-most valuable company is betting its future on.Microsoft has long invested in various forms of AI. It first announced it was working with OpenAI in 2016, and has since invested $13bn in the startup for what is reported to be a 49% stake. The deal means that Openai’s technology has to run on Azure, Microsoft’s cloud-computing arm. In exchange OpenAI has access to enormous amounts of Microsoft’s processing power, which it needs to “train” its powerful models.The investment became crucial to Microsoft one year ago with the launch of ChatGPT. The chatbot became the fastest-growing consumer software application in history, reaching 100m users in two months. Since then Microsoft has been busy working out how to infuse the startup’s technology into its software. It has launched ChatGPT-like bots to run alongside many of its offerings, including its productivity tools, such as Word and Excel; Bing, its search engine; and even its Windows operating system.Bringing parts of OpenAI in-house would be a smart move. The technology is central to Microsoft’s future. Having direct control over it eliminates the risk that OpenAI could take its technology in a different direction. And such influence would have been attained for a bargain. Before he was fired, Mr Altman was hoping to raise fresh funds for OpenAI that would value the firm at around $86bn. Hiring OpenAI’s boffins this way is something antitrust regulators would find harder to challenge than a straightforward acquisition. Investors appear keen. Microsoft’s share price fell slightly on the news of Mr Altman’s firing. That loss was reversed when his new gig was announced.Yet the move would also entail risks. One is reputational. A pillar of Microsoft’s AI strategy has been to keep the technology at arm’s length, thus insulating the company from any embarrassment caused when ChatGPT goes awry. When Meta, Facebook’s parent company, released Galactica, its science AI chatbot, the tool started to fabricate research. The public response was critical enough for Meta to take it down.Some analysts think that Microsoft may not need insulating any more. It has invested heavily in managing AI risks, with teams working on issues including security, privacy and limiting inappropriate behaviour. Microsoft’s version of OpenAI’s GPT models come with more guardrails than the startup’s do, notes Mark Moerdler of Bernstein, a broker. The firm’s launch of its own array of ChatGPT-like products suggests that it is confident it can manage some of the reputational flak.A bigger risk is that moving OpenAI in-house could create a “short-term slowdown in the progress of the technology,” argues Mr Moerdler. A team led by Mr Altman within Microsoft would take time to get off the ground because new models need to be designed and trained. If OpenAI lost its brightest employees in the meantime, that could slow the development of its new products—on which Microsoft still depends to jazz up its software. A third threat is that Openai’s talent goes not to Microsoft, but somewhere else entirely. Marc Benioff, the boss of Salesforce, another software firm, has said he will hire any OpenAI researcher who resigns.Whether they do leave will in part depend on the exact setup of Mr Altman’s new outfit. The early signs are that it will get plenty of independence. Mr Nadella referred to Mr Altman as the “CEO” of the new unit. Barry Briggs, of Directions on Microsoft, a consultancy, points out that Microsoft has given its previous acquisitions plenty of autonomy, citing the episodes of LinkedIn and GitHub in 2016 and 2018.The stakes this time are far higher: Openai’s talent is highly sought after and the company’s technology is key to Microsoft’s future. Mr Nadella will hope that he has secured his firm’s interests, whether Mr Altman takes up his new job or returns to the startup he founded. But the chaos is not over yet. ■ More

“WHICH WOULD you have more confidence in? Getting your technology from a non-profit, or a for-profit company that is entirely controlled by one human being?” asked Brad Smith, president of Microsoft, at a conference in Paris on November 10th. That was Mr Smith’s way of praising OpenAI, the startup behind ChatGPT, and knocking Meta, Mark Zuckerberg’s social-media behemoth.In recent days OpenAI’s non-profit governance has looked rather less attractive. On November 17th, seemingly out of nowhere, its board fired Sam Altman, the startup’s co-founder and chief executive. Mr Smith’s own boss, Satya Nadella, who heads Microsoft, was told of Mr Altman’s sacking only a few minutes before Mr Altman himself. Never mind that Microsoft is OpenAI’s biggest shareholder, having backed the startup to the tune of over $10bn.By November 20th the vast majority of OpenAI’s 700-strong workforce had signed an open letter giving the remaining board members an ultimatum: resign or the signatories will follow Mr Altman to Microsoft, where he has been invited by Mr Nadella to head a new in-house AI lab.The goings-on have thrown a spotlight on OpenAI’s unusual structure, and its even more unusual board. What exactly is it tasked with doing, and how could it sack the boss of the hottest ai startup without any of its investors having a say in the matter?The firm was founded as a non-profit in 2015 by Mr Altman and a group of Silicon Valley investors and entrepreneurs including Elon Musk, the mercurial billionaire behind Tesla, X (formerly Twitter) and SpaceX. The group collectively pledged $1bn towards OpenAI’s goal of building artificial general intelligence (AGI), as AI experts refer to a program that outperforms humans on most intellectual tasks.After a few years OpenAI realised that in order to attain its goal, it needed cash to pay for expensive computing capacity and top-notch talent—not least because it claims that just $130m or so of the original $1bn pledge materialised. So in 2019 it created a for-profit subsidiary. Profits for investors in this venture were capped at 100 times their investment (though thanks to a rule change this cap will rise by 20% a year starting in 2025). Any profits above the cap flow to the parent non-profit. The company also reserves the right to reinvest all profits back into the firm until its goal of creating AGI is achieved. And once it is attained, the resulting AGI is not meant to generate a financial return; OpenAI’s licensing terms with Microsoft, for example, cover only “pre-AGI” technology.The determination of if and when AGI has been attained is down to OpenAI’s board of directors. Unlike at most startups, or indeed most companies, investors do not get a seat. Instead of representing OpenAI’s financial backers, the organisation’s charter tasks directors with representing the interests of “humanity”.Until the events of last week, humanity’s representatives comprised three of OpenAI’s co-founders (Mr Altman, Greg Brockman and Ilya Sutskever) and three independent members (Adam D’Angelo, co-founder of Quora; Tasha McCauley, a tech entrepreneur; and Helen Toner, from the Centre for Security and Emerging Technology, another non-profit). On November 17th four of them—Mr Sutskever and the three independents—lost confidence in Mr Altman. Their reasons remain murky but may have to do with what the board seems to have viewed as pursuit of new products paired with insufficient concern for AI safety.The firm’s bylaws from January 2016 give its board members wide-ranging powers, including the right to add or remove board members, if a majority concur. The earliest tax filings from the same year show three directors: Mr Altman, Mr Musk and Chris Clark, an OpenAI employee. It is unclear how they were chosen, but thanks to the bylaws they could henceforth appoint others. By 2017 the original trio were joined by Mr Brockman and Holden Karnofsky, chief executive of Open Philanthropy, a charity. Two years later the board had eight members, though by then Mr Musk had stepped down because of a feud with Mr Altman over the direction OpenAI was taking. Last year it was down to six. Throughout, it was answerable only to itself.This odd structure was designed to ensure that OpenAI can resist outside pressure from investors, who might prefer a quick profit now to AGI for humankind later. Instead, the board’s amateurish ousting of Mr Altman has piled on the pressure from OpenAI’s investors and employees. That tiny part of humanity, at least, clearly feels misrepresented. ■ More

Here are some handy rules of thumb. Anyone who calls themselves a thought leader is to be avoided. A man who does not wear socks cannot be trusted. And a company that holds an employee-appreciation day does not appreciate its employees.It is not just that the message sent by acknowledging staff for one out of 260-odd working days is a bit of a giveaway (there isn’t a love-your-spouse day or a national don’t-be-a-total-bastard week for the same reason). It is also that the ideas are usually so tragically unappreciative. You have worked hard all year so you get a slice of cold pizza or a rock stamped with the words “You rock”?This approach reveals more about the beliefs of the relevant bosses than it does anything about what actually motivates people at work (the subject of this week’s penultimate episode of Boss Class, our management podcast). In a book published in 1960, called “The Human Side of Enterprise”, Douglas McGregor, a professor at MIT Sloan School of Management, divided managers’ assumptions about workers into two categories. He called them Theory X and Theory Y.McGregor, who died in 1964, was a product of his time. The vignettes in the book feature men with names like Tom and Harry. But his ideas remain useful.Theory X managers believe that people have a natural aversion to work; their job is to try and get the slackers to put in some effort. That requires the exercise of authority and control. It relies heavily on the idea of giving and withholding rewards to motivate people. Perks and pizza fit into this picture but pay is critical to theory X; work is the price to be paid for wages.Theory Y, the one McGregor himself subscribed to, is based on a much more optimistic view of humans. It assumes that people want to work hard and that managers do not need to be directive if employees are committed to the goals of the company. It holds that pay can be demoralising if it is too low or unfair, but that once people earn enough to take care of their basic needs, other sources of motivation matter more. In this, McGregor was a follower of Abraham Maslow, a psychologist whose hierarchy of needs moves from having enough to eat and feeling safe up to higher-order concepts like belonging, self-esteem and purpose.Theory X is not dead. It lives on in low-wage industries where workers must follow rules to the letter and in high-wage ones where pay motivates people long after they can feed themselves. It surfaces in the fears of managers that working from home is a golden excuse for people to do nothing. It shows up in the behaviour of employees who phone it in and bosses who bully and berate.Nevertheless, theory Y is in the ascendant. You cannot move for research showing that if people think what they do matters, they work harder. A meta-analysis of such research, conducted by Cassondra Batz-Barbarich of Lake Forest College and Louis Tay of Purdue University, found that doing meaningful work is strongly correlated with levels of employee engagement, job satisfaction and commitment. Trust is increasingly seen as an important ingredient of successful firms; a recent report by the Institute for Corporate Productivity found that high-performing organisations were more likely to be marked by high levels of trust.Firms of all kinds are asking themselves Y. Companies in prosaic industries are trying to concoct purpose statements that give people a reason to come into work that goes beyond paying the rent. The appeal of autonomy and responsibility permeates the management philosophy not just of creative firms like Netflix but also of lean manufacturers who encourage employees to solve problems on their own initiative. Some retailers have raised wages in the Theory Y belief that reducing workers’ financial insecurity will improve employee retention and organisational performance.McGregor himself wrote that the purpose of his book was not to get people to choose sides but to get managers to make their assumptions explicit. On this score he is less successful. It is still possible to run financially viable firms in accordance with Theory X. It is impossible to admit it. More

McDonald’s is increasing its minority stake in its China business from 20% to 48%.
In 2017, the fast-food giant sold control of its restaurants in mainland China, Hong Kong and Macao to Carlyle and Citic.
In the five years since then, McDonald’s has doubled its footprint in China to more than 5,500, making the market its second largest by number of locations.

Customers wait for their takeout food outside a McDonald’s restaurant during the May Day holiday on May 1, 2022 in Beijing, China.
VCG | Getty Images

McDonald’s is buying Carlyle’s stake in its China business, increasing its minority share from 20% to 48% ownership.
The fast-food giant sold off control of its restaurants in mainland China, Hong Kong and Macao in 2017 for $2.1 billion. It was part of McDonald’s broader strategy to own fewer restaurants, leaving it to franchisees with knowledge of local markets to run their own locations.

At that time, Citic, a state-owned investment firm, took the majority stake, while private equity giant Carlyle bought a 28% stake. McDonald’s held on to 20% of the business.
Financial terms of the deal announced Monday were not disclosed. The deal is expected to close in the first quarter of 2024, assuming regulators approve it. Citic still retains its 52% stake in the business.
“We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential,” McDonald’s CEO Chris Kempczinski said in a statement.

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Since 2017, McDonald’s has doubled its footprint in China to more than 5,500, making the market its second largest by number of locations. The chain aims to reach 10,000 restaurants by 2028.
But McDonald’s sales in China have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’s total revenue, down 3.8% from the year prior, according to Factset estimates.

On McDonald’s latest earnings call, Kempczinski noted that China is dealing with “slowing macroeconomic conditions and historically low consumer sentiment,” although the chain is drawing in customers by promoting its burgers.
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