How McDonald's Really Makes Money

Audio editing by Eric Schneider
Motion graphics by Vincent de Langen
Everything else by Evan

This includes a paid sponsorship which had no part in the writing, editing, or production of the rest of the video.

[KnyteMan]

They save a ton of money by not fixing their Ice-cream machines.

[jonathan.t.]

"What's your job?"

"Oh, I manage sales at a billion-dollar international real estate company."

[ZooDinghy]

"McDonald's earns money with real estate, not burgers."
"And how do franchisees earn money to pay the rent?"
"By selling burgers."

[patsfreak]

McDonalds is legit a real estate juggernaut. My wife’s small town had one and a Burger King until BK closed. McDonalds immediately bought the BK property to both box out any competition moving in and to pick when and who gets it after.

[FinancialShinanigan]

Burger is their side business, charging rent is their cash cow

[aniruddhdp]

Mcdonald's: give me rent
Owner: you'll get ur rent when you fix this damn ice cream machine

[FreedomDaveX]

This whole thing blew my mind the way they’ve built this tight scheme of outsourcing their risks. If a location or the overall brand struggles, the franchisees take the hit and McDonalds walks off unscratched. The franchisee can go under and the location can just be passed on to the next franchisee willing to take its place and we can all forget that anything ever happened.

[zerodos_]

They also stipulate in their contracts how often the buildings need to be remodeled/renovated/rebuilt. It's a fascinating model that covers their bases at all turns

[cerjmedia]

Everybody: "McDonald's is a Fast Food Restaurant"
Intellectuals: "McDonald's is an International Real Estate Company"

[Carlos-lnfd]

The movie The Founder is really great at explaining this

[m.ramos]

This has to be the most impressive business model that is literally immune to anything. They own everything that appreciates in value, have full control of their franchises and on top of that zero exposure to any loses from any branch. Very impressive

[Saturdayz_In_The_Fall]

The owners of the McDonalds in my small town is one of the city council members and she actually voted NO when Starbucks was wanting to build a restaurant across the street.

[timberlin]

next: how los pollos hermanos really makes money

[thaintriguing]

“You’re not in the burger business, you’re in the real estate business.”

~Harry Sonneborn

[jeffjefferson]

Rent is how you maintain perpetual wealth. You make money without trading any assets, and once you become large enough people can't survive without using your assets. Think of monarchy, land owners during the serf system era.
When you begin to realise that the banks rent you your own money(ATM/card transaction charges, charges on drawing cash), the government rents you the right to trade(taxes). You have to pay someone just to do anything. That's how they keep you down and themselves in power.

[xorxpert]

They loose tons of money having to call “The guy” to come fix the ice cream machines, because they aren’t able to without voiding their contract. The little things you don’t know about McDonalds, actually is a huge deal.

[louisazraels]

it's just semantics, franchisees are paying their high rent because the burgers sell well, they generate value with their brand, not their real estate dealings, they collect the value through rent that's all. Choosing a good location for a restaurant is still restaurant related business.

[phinadelphiahlongwane]

I still remember back in University our lecture in Management Accounting asked what McDonald's main source of income is and what type of business is it classified as.. no one got this right.. we were so confident he was wrong about until we pulled their Financial Statements

[ogbmt]

They're definitely right to not separate their real estate holdings. Each part of the business provides stability for the other. If the real estate side started to perform badly then they could let the leases start to expire and convert back to a more traditional model.

[derekschultz]

"How mcdonalds makes money"
*me with a 20 piece nugget large fry and mcdouble* : wow