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O McDonald’sthe world’s largest fast food network has released its financial results revealing a surprising business strategy: the company profits more with rents than with the sale of hamburgers.
Facade McDonald’s/Photo: Reproduction
62% of the company’s revenues come from franchised restaurants, while only 36% come from their own stores.
The secret is in the business model adopted by the network, which goes beyond the traditional franchise system.
Instead of waiting for potential franchisees to look for the company to start a store, McDonald’s takes the initiative to search and purchase strategic land.
The corporation buys the lot and builds the restaurant, and it is up to the franchisee only the acquisition of the equipment.
Thus, McDonald’s not only receive royalties on sales, but also the rental of the property. This model is applied in 55% of more than 43,000 stores around the world.
In 20% of the units, the franchisee owns everything, but is a partner of McDonald’s in the business, paying royalties and a portion of profits.
Another 20% follow the traditional franchise model, where the franchisee owns everything and pays only the royalties. The remaining 5% are the network’s own stores.
This revelation corroborates the thesis that McDonald’s is not just a restaurant network, but a powerful real estate company.
The movie “Hunger for Power” (The Founder) portrays this story, showing how Ray Kroc, a key figure in the brand expansion, focused more on real estate strategy than in the food itself.
McDonald’s innovative approach demonstrates how real estate management can be a crucial component in the success of a global fast food network, turning the company into a giant not only of food, but also from the real estate market.
