Franchises instead of fries: This is how McDonald’s really earns his money – and what it has to do with the stock

• McDonald’s profit driver is not fast food
• Franchise model as a solid source of income
• Second quarter convinced

Fast Food is not McDonald’s largest source of income

In 2024, McDonald’s achieved sales of over $ 130 billion. Compared to the previous year, this corresponded to growth of over $ 1 billion. The loyalty program in particular developed dynamically: sales with loyalty members achieved around $ 30 billion in the year – an increase of $ 30 percent. Meanwhile, the profit per share was $ 11.39, which corresponds to a decline of 1 percent.

Despite his worldwide awareness as a burger chain, McDonald’s does not earn most of his money with the sale of fast food. According to Wall Street Survivor, the former CFO Harry J. Sonneborn aptly explained: “Technically, we are not active in the grocery store. We are in the real estate business. The only reason we sell 15 cent hamburgers is that you are the biggest turnover from which our tenants can pay our rent.”

Franchisee as the largest source of income

This concept goes back to Ray Kroc, who recognized the original restaurant concept of the McDonald brothers, expanded it and took over the company in 1961. McDonald’s expanded through an intelligent franchise model and targeted real estate investments. Most of the more than 36,000 branches worldwide are now operated by franchisees. Only about 15 percent belong to the company itself. However, McDonald’s has around 45 percent of the floor and 70 percent of the buildings on which its restaurants are operated – and collects the rent for this. This model paid off in particular during the 2008 financial crisis: McDonald’s benefited from the falling real estate market and further expanded its portfolio.

McDonalds’ profit accordingly comes from the franchise model – and especially from the real estate business. The company not only achieves income from the license fees and sales sharing of its franchisee, but also by renting the locations. McDonald’s generates a double source of income.

The mixture of fast food operation, franchising and real estate power also gives McDonald’s stability. But this business model is also not without risk: franchise contracts can expire and new gastronomic trends are increasingly putting the brand under pressure. The group therefore tries to counteract with a higher franchise, real estate sales and internal reforms. Whether McDonald’s hits the taste of time again remains open – however, the real estate level ensures solid yields.

So the second quarter for McDonald’s ran

Just yesterday, the worldwide fast food chain also presented the numbers for the recent quarter.

The profit per share increased from $ 2.8 to $ 3.14 in the past quarter and thus met the analyst estimates of $ 3.14. Meanwhile, sales attracted 5 percent to $ 6.843 billion. Meanwhile, analysts expected $ 6.7 billion sales.

Investors acknowledged the quarterly results with acquisitions. On Wednesday, the McDonalds share said goodbye to NYSE-Trade by 2.98 percent higher at $ 307.66.

Since the beginning of the year, the paper has meanwhile recorded an increase of 6.13 percent. In the past 12 months, the plus is even 14.21 percent (state of the data: 06.08.2025).

Editor finance.net

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