Why McDonald’s Is NOT A Restaurant (Business Model Explained)

    McDonald’s is arguably the most successful restaurant in the world. The company is worth nearly $150 billion, and that number keeps climbing every day. But you may be surprised to learn that most of their money doesn’t come from their food sales. In today’s video, we’re going to be talking about how McDonald’s really makes its money.

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    How McDonald’s Makes $21+ BILLION A Year (It’s Not What You Think)

    #McDonalds #Investing #Entrepreneurship

    1:10 – How McDonald’s was founded by brothers Richard and Maurice McDonald, and their unique “Speedee service system”
    2:37 – How everything changed with the arrival of entrepreneur Ray Kroc
    3:27 – Why food, toys, and limited time promotions help but aren’t McDonald’s main moneymaker
    5:35 – Why McDonald’s is in the real estate business
    6:15 – How franchising works
    7:22 – How much does it cost to open your own McDonald’s franchise
    8:50 – Why McDonald’s biggest strength has been their overall ability to evolve and change

    Back in the 1950s, the entrepreneur who would eventually turn McDonald’s into a global business, Ray Kroc, had a lot of big ideas for the restaurant. The biggest one can be summed up in a single word.

    “Franchise, franchise, franchise, franchise, franchise.”

    The food at McDonald’s has always sold like hotcakes but once the restaurant started franchising, things changed. For decades, entrepreneurs have been dreaming of opening their own McDonald’s. But owning a franchise isn’t as easy as you think.

    In order to open your own McDonald’s franchise business, you need the following: invest $250,000-$500,000 in non-borrowed cash, the financial stability to borrow up to $1,700,000 extra, $45,000 to pay McDonald’s right away. Then you have to do a nine-month intensive training course on how to run a McDonald’s business.

    Entrepreneurship isn’t easy: on paper, the desire to own a part of a successful, globally known business has obvious appeal. But things that are appealing may come with consequences. In the case of a McDonald’s franchise business, the consequence is the financial strain it can put on the investor.


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