McDonald’s is huge in just about every country across the globe. Their famous slogan and jiggle is something many children grow up knowing my heart. For those of us in The States, McDonald’s is intricately weaved throughout our lives — it is often a first job, a first date spot, or a cheap and fast way to feed a family. But would you be surprised to learn the bulk of McDonald’s money does not come from slinging hamburgers?
During the last recession in 2008, McDonald’s opened over 600 new locations! Not only that, they saw an amazing 29% return on equity (ROE). ROE is basically finance talk for the profitability in relation to stockholder’s equity — average ROE is considered around 15%… McDonald’s does way above average. And the reason they do so well is because of property.
What is so remarkable about McDonald’s being a real estate giant is 85% of their restaurants are franchises. This means people shell out their hard-earned money to lease the McDonald’s name and branding. In 2019, franchisees would pay most of their money to McDonald’s for rent, this means they are making more money in rent than in burger sales! And the locations McDonald’s ends up being built are stringently researched, this ensures a very safe bet for the company.
This corporate giant proves time and again that they are not only some of the smartest out there, but they are recession-proof. For more information about just how smart his company is, please watch the video below. Let us know which meal is your favorite at McDonald’s (mine is the Big Mac) in the comments. And from all of us at Trill!: mask up, wash your hands, and congrats to President-Elect Biden.
All screenshots are from the video by PolyMatter.
