U.S. Restaurant Chains Shift to Local Partnerships: The Burger King China Sale

Restaurant Brands International (RBI), the corporation that owns the New York-listed Burger King brand, has reached an agreement to divest a controlling interest in its Chinese operating subsidiary to the private equity firm CPE for $350 million, as reported by the Nikkei Asian Review. Under the terms of the transaction, CPE, which was formerly the private equity division of Beijing-based CITIC Securities, will acquire an approximate 83% ownership stake in Burger King China. RBI will retain the remaining 17% stake and a position on the subsidiary's board of directors. RBI stated that this sale aligns with its corporate strategy of collaborating with seasoned local investors and operators while maintaining its predominantly franchise-based global business structure.

According to Nikkei, American dining chains are increasingly pursuing partnerships with local entities, a trend influenced by decelerating consumption growth in China which has led foreign private equity firms to exercise greater caution regarding new investments within the country. This sale of a controlling interest in Burger King follows a similar recent action by the US coffee chain Starbucks, which agreed to sell a 60% stake in its China operations to the private equity firm Boyu Capital.

The collaborative venture between RBI and CPE is projected to accelerate the expansion of Burger King across China, with a goal of doubling the current number of restaurants within the next five years and reaching an overall count exceeding 4,000 locations by 2035. Burger King’s network in China totaled 1,474 restaurants by the end of 2024, positioning it as RBI’s largest market globally. However, the average revenue per restaurant in the Chinese unit was recorded at just $400,000, which is significantly lower than the best-performing unit, Burger King France, which achieved $3.8 million per restaurant.

Joshua Kobza, CEO of RBI, commented that "CPE is a financially robust, proven operator possessing exceptional leadership and deep expertise in consumer and restaurant industries, making it the ideal partner to spearhead the next phase of Burger King China's growth." Ivan Su, a senior equity analyst at Morningstar, noted that while the timing of the Starbucks and Burger King deals may be coincidental, it strongly indicates that "a competent and localized team is fundamental to aligning the brand's menu and supply chain with the evolving preferences of Chinese consumers."

Mr. Su further elaborated that this localization becomes even more critical given the dynamic shifts in the Chinese economy and consumer tastes. Restaurant operators must therefore "rapidly adjust their pricing and product composition to align with new consumption norms." He cited Yum China, which operates the KFC and Pizza Hut brands in China, as a "prime example of what a localized team can achieve." The CEO of Yum China recently informed Nikkei Asia that the company has devised a strategy to navigate subdued consumer demand by embedding "emotional value" into its product offerings while simultaneously maintaining competitive pricing.

Separately, McDonald’s agreed to acquire a 28% stake in its China business in 2023 following the exit of the private equity group Carlyle from its investment. One year later, CITIC Capital, a subsidiary of the Chinese state-owned conglomerate CITIC Group and already a minority shareholder in the China operations, announced its intention to increase its holding in McDonald's China to 52%. RBI Group anticipates that the Burger King transaction will be formally completed in the first quarter of 2026, pending necessary regulatory approvals.