Deep Dive: How much does the average McDonalds franchise make?

Posted by Callum Short on Jan 17, 2015

The burgers are big, but do the franchisees returns correlate? In this article we’ll explore the McDonald's franchise and the generalised experience of branch owners. McDonald's is known as the most significant franchise in the world, it’s the universal symbol which provokes hunger like no other. The day-to-day traffic of the global brand exceeds the population of Great Britain, that’s a large quantity of cows and a magnificent amount of potatoes.

Franchise Profile

  • 35,000 outlets internationally
  • 1.7 Million employees
  • Training provided
  • Serves 1% of the global population daily
  • Operates globally
  • Requires money

Seriously, a lot of it. Despite being one of the most significant and high-volume franchise networks in the world, it’s also one of the most expensive. Why? Because it is the go-to restraint for fast food, has a perfected marketing model has an absolutely minimal investment risk. So how much does a McDonalds franchise cost? The expense of the restaurant alone will set you back between £125,000 and £300,000, which of course can extend massively when procuring real estate locations of high traffic (Correlating with ROI?). There is also a nice collection of additional fees such as the 30k initial franchising fee, the 5k training fee.

Surprisingly, McDonald's does not profit directly from the sales and day-to-day business functions of each branch, instead, they’re act as a proxy between the restaurant real estate and the franchisee. Charging a fee between 10% and 15% of the individual branches sales and profitability, this is considered rent for the premises as the sales and profitability is arguably completely determined by the restaurants location and premises.

The Return
The article so far seems quite daunting, a ton of expenses and a doubtful amount of control. But think about it, McDonald's has been running profitably for decades, with over 30,000 outlets globally and acting as one of the single consistencies across the global array of cultures. They know how to make their franchise work, they have the demand nailed, the suppliers nailed, the day-to-day functions nailed. What do they need from you? Your money. As an ultimate real estate investor their interests are revolved around the procurement of their restaurant opportunities and nothing will allow them to achieve further globalisation (mcdonaldisation?) than the franchising system.

90% of the time franchising will give you a pre-packaged business brand to build on through your sales expertise, it puts you in control of your revenue. McDonald's does not, yet the ROI for a restaurant is often reported as averaging upwards of 90k per year. All for what? Your hard work and that initial capital we previously discussed.
So, if you have plenty of time, management experience and a nice pile of money, McDonald's might just be your franchise.

The Marketing
The McDonalds marketing infrastructure is something which is extremely diversified and lightweight yet so powerful at the same time. Think of a McDonalds advert, what is it? I can’t think of one off the top of my head. But the brand is everywhere, from billboards at bus-stops to adverts on T.V and sports sponsorship. Is it because we are so used to seeing their logo that it no longer stands out but instead is registered in our sub-consciousness? They have got time on their side, the heritage of McDonald's is so engraved into our culture that it is the go-to brand for fast food/city food/tasty food, it’s somewhat exceptional.

McDonald's is no short of crazy with their marketing either, planning a joint space mission with NASA to the asteroid 449 Hamburga which was sadly cancelled eventually.
To conclude, my personal thoughts of the McDonald's franchise deem it brilliant as a long-term and scalable investment with low-risk. However, for those interested in franchising for its communal aspects and revenue control, this won’t be as significant with McDonald's. Sales really are out of your hands and the franchisees aren't as tightly knitted, which is understandable given the size of their organisation.

Fun fact: Thomas Friedman stated that no two countries housing the McDonald's franchise have ever gone to war with each other. Is it true? Could a big mac be the answer to world peace?

McDonald's not for you? Find out how to find a profitable franchise

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