One thing that I learned recently from the Modern MBA YouTube channel, is that these fast food brands don’t run stores – they primarily charge franchise/royalty fees, and the store operators/franchisees see a significantly different and lower-profit-margin situation.
“McDonalds Corporation” is not where these expenses accrue.
It’s true that the McDonald’s corporation is in the real estate business, not the burger business. But the franchisees are certainly in business selling hamburger analogues. They wouldn’t be on every corner if they weren’t profitable. I read once that if you want to open a McDonald’s, they won’t even talk to you unless you have a million dollars cash. It takes a fuck ton of money to open a McDonald’s franchise and people still do it, because it’s a license to print money.
One thing that I learned recently from the Modern MBA YouTube channel, is that these fast food brands don’t run stores – they primarily charge franchise/royalty fees, and the store operators/franchisees see a significantly different and lower-profit-margin situation.
“McDonalds Corporation” is not where these expenses accrue.
It’s true that the McDonald’s corporation is in the real estate business, not the burger business. But the franchisees are certainly in business selling hamburger analogues. They wouldn’t be on every corner if they weren’t profitable. I read once that if you want to open a McDonald’s, they won’t even talk to you unless you have a million dollars cash. It takes a fuck ton of money to open a McDonald’s franchise and people still do it, because it’s a license to print money.
Those franchise fees are still tied to sales enough to have a dip during covid and continuous increases after which aligns with menu price increases.