By using this site, you agree to our Privacy Policy and our Terms of Use. Close
thranx on 04 September 2013
Edit Thread
Zappykins said:
thranx said:
Zappykins said:
thranx said:
Zappykins said:
 

Ok, have you ask you, what is McDonalds primary business?


Not sure what you mean. Their primary goal (as is any company) is to make a profit, they plan on doing this by selling food.

Their primary business is real estate.  The sale of food is lower down the line of importance.


Yes Mc Donald Corp gets its money through rent/franchise fees, they only rent to MC D operators though, who get their income from the sale of food. should the food fail, so will the real estate, as who will pay marked up fees to rent a building that doesn't serve hundreds of people a day.  Their real estate is reliant on the food. With out their food, there is no reason for them to buy/lease land, build a building, and rent it.  If real estte was more important to them, they would of branched out more in that area, instead of using it as means to keep a tight control on their franchises (and thus their food).

I'm not going to argue with you, but suggest you read about Ray Kroc and his vision for the company.  There are one of the largest real estate owners in the world.  At times even challenging the Roman Catholic Church in value holdings. 

Food is and has always been secondary if not lower. 

Here is a place to start:  http://money.howstuffworks.com/mcdonalds2.htm

Kinda like what is Sony's main business?  That's right, insurance.


i know what you mean. I have read a lot about Mc D's. Again I say, they only hold real estate becasue they sell food. Its not a seperate priority from real estate. real estate serves the food side. Yes they make more oney from rent, as do most franchises. But there is no rent if there is no food. Mc D's has revolutioned food in cleaniness, in constistency, and speed. In fact i was just reading that article, how funny. I point you to this page http://money.howstuffworks.com/mcdonalds4.htm and on the procedding page that talks about real estate

"That all changed in 1956 when he hired Sonneborn, who convinced him that the real money was in real estate. Sonneborn's idea was to have the McDonald's company lease a plot of land and the building for each restaurant. The company would then sublease to the franchisee who would run the restaurant. Sonneborn further developed the plan to eventually take out mortgages to own both the building and the land. [source: Love]. Kroc soon established the Franchise Realty Corp. to find willing landowners.

­­At first, McDonald's charged franchisees markups of 20 percent of lease costs, but it eventually increased this to 40 percent. Franchisees were responsible for insurance and taxes, ensuring a steady profit for the company as long as the restaurant stayed in business.

­But that's not all: The rent due to McDonald's could be even more if the restaurant was doing well. The franchisee had to pay either the stipulated lease markup or 5 percent of the sales -- whichever was higher. Kroc and Sonneborn also requested up-front security deposits from the franchisees. Unbeknownst to the franchisee, this capital would fund the opening of more restaurants. Overall, this created a symbiotic relationship between the franchisee and the company -- McDonald's Corp. had a vested interest in the ongoing success of its individual restaurants"

 

Their real estate was a means to an end to hold more control over franchisees, to make their franchise reastaurants more successfulso they could make more money in rent and fees. It relies on the food(and service) to keep the rent coming. no good food, no more rent. Its a common practice for franchises to operate this way, but they still must have good food, profitable food, to keep franchise owners paying rent/fees