How McDonald's Really Makes Money | Reaction
This is how McDonald's really MAKES MONEY!
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This video by PolyMatter ( • How McDonald's Really Makes Money )
popped up in my suggested and it's a slick summary how McDonald's really makes money. A huge chunk of McDonald's business plan revolves around real estate and collecting rent - gotta love that monthly cash flow!
Plus McDonalds locks franchisees into 20 year tenancies and so gets guaranteed rental income so McDonald's makes money regardless of how busy the restaurant gets.
McDonald's also gets a significant royalty from each franchisee and it can cost a franchisee and initial investment of $1,000,000 - $2,000,000.
This business model as pioneered by Ray Kroc has made McDonald's one of the biggest real estate giants in the world (in addition to being one of the most recognizable brands and most successful franchise in history). The average profit a McDonald's makes is around $150,000 on a turnover of $2.7 million per year. The recent film "The Founder" tells the origin story of McDonald's and how Ray Kroc made it the monster brand it is today.
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