How Much Mcdonald's Franchise Owners Really Make Per Year

00:04:41
https://www.youtube.com/watch?v=kr_iqkRcLHU

Resumen

TLDRMcDonald's stands as the world's most successful restaurant, valued at nearly $150 billion, primarily due to its franchising model introduced by Ray Kroc in the 1950s. While franchise ownership presents opportunities, it comes with significant financial burden. The initial investment ranges between $1 million and $2.2 million, with at least 40% required as cash assets. Franchisees average $2.7 million in annual sales but yield only about $150,000 in profit, translating to less than 6% profit margin after expenses. Despite this, McDonald's profits significantly from its franchise system, keeping 82% of revenues from franchise fees compared to only 16% from its corporately-owned stores. This results in a highly profitable model for McDonald's, albeit challenging for franchise owners to navigate.

Para llevar

  • 💰 McDonald's is valued at nearly $150 billion.
  • 🍔 Ray Kroc's big idea was to franchise.
  • 💸 Initial investment for a franchise is $1-2.2 million.
  • 🏦 Franchisees must have 40% cash assets.
  • 📈 Average McDonald's sales: $2.7 million/year.
  • 💵 Average yearly profit for owners: $150,000.
  • 🔄 Franchise owners pay 15% of sales to McDonald's monthly.
  • 🌍 95% of McDonald's locations are franchises.
  • 📊 McDonald's revenue was $27.4 billion in 2014.
  • 🏢 McDonald's keeps 82% of franchise fees, only 16% from own stores.

Cronología

  • 00:00:00 - 00:04:41

    McDonald's is recognized as the most successful restaurant globally, valued at nearly $150 billion. Ray Kroc, who transformed McDonald's into a franchise powerhouse in the 1950s, believed strongly in the franchising model, leading to increased brand visibility and sales. Despite the allure of franchise ownership, it requires a significant investment ranging from $1 million to $2.2 million, with 40% needing to be cash or non-borrowed assets. Franchisees typically earn around $150,000 annually from an average $2.7 million in sales, though this represents less than 6% profit after expenses. Additionally, franchisees contribute ideas that have spurred menu innovations, helping the brand to thrive. However, the corporate structure means McDonald's generates substantial profits from franchise fees and a percentage of sales, resulting in franchises primarily benefiting the parent company rather than franchise owners. Overall, franchise ownership can be profitable, but the corporate machinery takes a significant share.

Mapa mental

Vídeo de preguntas y respuestas

  • What is the estimated initial investment for a McDonald's franchise?

    The initial investment ranges from $1 million to $2.2 million.

  • What percentage of sales do franchise owners pay to McDonald's?

    Franchise owners fork over about 15% of their sales every month.

  • How much revenue did McDonald's generate in 2014?

    McDonald's generated $27.4 billion in revenue in 2014.

  • What is the average yearly profit for a McDonald's franchise?

    The average yearly profit for a franchisee is roughly $150,000.

  • What portion of McDonald's locations are franchised?

    Around 95% of McDonald's locations are franchise-owned.

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  • 00:00:00
    There's no question about it, McDonald's is the most successful restaurant in the history
  • 00:00:05
    of the world.
  • 00:00:06
    The company isn't worth millions, but billions, nearly $150 billion, and that number keeps
  • 00:00:12
    climbing every day.
  • 00:00:13
    Back in the 1950s, the man who would eventually turn McDonalds into an international powerhouse,
  • 00:00:18
    Ray Kroc, had a lot of big ideas for the restaurant.
  • 00:00:21
    But perhaps his biggest idea can be summed up in a single word.
  • 00:00:25
    "Franchise, franchise, franchise, franchise, franchise."
  • 00:00:31
    The food at McDonald's has always sold like hotcakes but once the restaurant started franchising,
  • 00:00:36
    the world began eating up the brand.
  • 00:00:38
    So, it's not surprising that for decades, entrepreneurs have been flocking to the Golden
  • 00:00:42
    Arches with dreams of opening their own McDonald's.
  • 00:00:45
    But being a franchise owner isn't as easy, or profitable, as you might think.
  • 00:00:50
    For starters, buying into a McDonald's franchise is expensive, and if prospective franchisees
  • 00:00:56
    want to get a piece of the pie, they'll have to bring some heavy coin to the table.
  • 00:01:00
    According to Business Insider, the initial investment is between $1 million and $2.2 million.
  • 00:01:07
    That price tag is pretty broad, but McDonald's notes that these costs are based on the restaurant's
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    location and size.
  • 00:01:13
    Long story short, it's going to cost a lot more to buy a McDonald's franchise in San
  • 00:01:17
    Francisco than it is in Saginaw, Michigan.
  • 00:01:19
    Before you take the plunge with Mickey D's and start your own franchise, keep in mind
  • 00:01:23
    that 40 percent of that initial investment must be cash or non-borrowed assets.
  • 00:01:29
    Whether it's McDonald's or other fast food restaurants, franchise owners can do pretty
  • 00:01:33
    well, at least, once they get past their initial investment hurdle.
  • 00:01:36
    According to Business Insider, the average McDonald's restaurant takes in around $2.7
  • 00:01:41
    million a year in sales.
  • 00:01:43
    That may not be quite as high as other well-known eateries, such as Chick-fil-A or Panera Bread,
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    but it's still pretty good.
  • 00:01:49
    Of course, some McDonald's franchise owners are going to make more than others, but most
  • 00:01:53
    franchisees pull in an estimated yearly profit of roughly $150,000.
  • 00:01:58
    However, after $2.7 million in sales, a profit of $150,000 isn't even 6 percent.
  • 00:02:06
    Once you deduct the price of supplies, food, payroll, and about a dozen other costs handed
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    down by the corporation, that's what an average franchise owner is left with.
  • 00:02:14
    The franchise system has been a major reason for Ronald and his company to celebrate since
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    the 1950s, and it's actually how McDonald's makes a significant portion of its profit.
  • 00:02:24
    Plus, franchise owners have historically brought a lot more than money to the table by contributing
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    some of the company's most important innovations.
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    "The Big Mac, the Filet-O-Fish, even the drive-through concept were all developed by franchisees
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    working within the McDonald's framework."
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    So while McDonald's franchise owners can make a six-figure salary through their restaurant,
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    the McDonald's corporation is making much, much more.
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    It all starts with the $45,000 franchise fee that owners pay.
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    Then, there's the never-ending monthly service fee that takes 4 percent of a location's gross
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    sales.
  • 00:02:59
    After that, franchisees pay a rental fee each month, which works out to be an average of
  • 00:03:03
    around 10.7 percent of sales.
  • 00:03:06
    So basically, McDonald's franchise owners are forking over 15 percent of their sales
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    every month to the Mickey D's machine.
  • 00:03:13
    This system is extremely profitable for the Golden Arches.
  • 00:03:17
    So much so that only around 5 percent of the McDonald's locations on the planet are owned
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    by the company.
  • 00:03:23
    The rest are franchise operations that are paid for upfront by the franchise owner.
  • 00:03:27
    According to Reader's Digest, McDonald's raked in 27.4 billion dollars in revenue in 2014,
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    and how that breaks down is pretty telling.
  • 00:03:36
    $9.2 billion of the revenue was from franchised locations and $18.2 billion was attributed
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    to company-owned locations.
  • 00:03:45
    On the surface, it sounds like the company-owned locations are the real money-makers, but that's
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    simply not the case.
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    The cost of running a business, especially a restaurant, can really cut into its profits.
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    At the end of the day, McDonald's only keeps around 16 percent of the revenue its company-owned
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    stores make, but it keeps 82 percent of the revenue franchisees pay out to it.
  • 00:04:06
    That all adds up to mega-bucks for Mickey D's.
  • 00:04:08
    So, while owning a franchise should put plenty of food on your table, the McDonald's corporation
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    will take a huge bite out of your bottom line.
  • 00:04:16
    "It's like they don't care if you make money as long as they make money.
  • 00:04:20
    What kind of corporation does that?"
  • 00:04:23
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Etiquetas
  • McDonald's
  • franchise
  • profitability
  • Ray Kroc
  • fast food
  • business model
  • investment
  • financial structure
  • revenue
  • restaurant industry