WHY MCDONALD'S DOESN'T ACTUALLY MAKE MOST OF ITS MONEY FROM BURGERS
You go to McDonald’s.
You buy a Big Mac.
You think McDonald’s just made money from selling you a burger.
But the real business is much bigger than that.
McDonald’s has built a system where someone else can run the restaurant...
while McDonald’s collects rent and royalties.
THE FRANCHISE MODEL
Around 95% of McDonald’s restaurants worldwide were franchised at the end of 2025.
That means McDonald’s doesn't directly operate most of the restaurants you see.
Instead, franchisees operate them under the McDonald’s brand and system.
And they pay McDonald’s.
BUT WHAT DO THEY PAY FOR?
Two of the biggest things:
RENT
ROYALTIES
McDonald’s generally controls the underlying real estate or secures the long-term lease for conventional franchised restaurants.
The franchisee operates the restaurant.
McDonald’s collects rent and royalties tied to the restaurant's sales.
So when the restaurant sells more burgers...
McDonald’s can make more money too.
THE NUMBERS ARE CRAZY
In 2025, McDonald’s reported:
$10.44 BILLION in rental revenue
$6.02 BILLION in royalties
$16.55 BILLION in total revenue from franchised restaurants.
That was before even counting the company's sales from its own restaurants.
AND HERE'S THE IMPORTANT PART
McDonald’s doesn't have to buy the ingredients for every Big Mac sold around the world.
It doesn't have to pay the employees at every franchised restaurant.
It doesn't have to operate every location itself.
The franchisee handles much of the day-to-day operation.
McDonald’s provides the brand, operating system, technology, marketing and, in many cases, the restaurant location.
The franchisee provides the operation and capital required under the agreement.
THAT CHANGES THE ECONOMICS
Imagine two businesses.
BUSINESS A:
Owns 10,000 restaurants.
Pays the workers.
Buys the food.
Pays the utilities.
Handles the daily operations.
BUSINESS B:
Has thousands of independent operators running restaurants under its brand.
Collects rent.
Collects royalties based on sales.
Business B can have a very different cost structure.
That's the logic behind McDonald's heavily franchised model.
THE REAL ESTATE PART IS HUGE
McDonald's isn't just licensing its logo.
For many conventional franchises, the company maintains control of the underlying land and building.
The franchise agreement generally lasts around 20 years.
When it ends, McDonald’s can renew the agreement, choose another franchisee or close the restaurant.
So the restaurant can look like a burger business from the customer's perspective...
while underneath it is also a franchise and property business.
THE BURGER IS STILL IMPORTANT
This doesn't mean burgers don't matter.
They are the engine that generates the sales.
More customers.
More orders.
More restaurant sales.
More royalty revenue.
And potentially more rent-related revenue for McDonald’s.
The burger creates the transaction.
The franchise system creates the economics.
THE BUSINESS LOOP
CUSTOMER BUYS BURGER
↓
RESTAURANT GENERATES SALES
↓
FRANCHISEE KEEPS ITS OPERATING PROFIT
↓
MCDONALD'S COLLECTS RENT + ROYALTIES
↓
FRANCHISEE WANTS MORE SALES
↓
MCDONALD'S BENEFITS FROM A LARGER SYSTEM
That's why McDonald’s says its heavily franchised model is designed to generate stable and predictable revenue.
SIMPLE IDEA
Sometimes the thing customers see isn't the thing that makes the company most valuable.
You see burgers.
McDonald’s sees a global network of franchises, real estate, royalties and recurring cash flows.
MAACAT PERSPECTIVE
The smartest part of McDonald’s business isn't necessarily the Big Mac.
It's the system built around the Big Mac.
McDonald’s turned a restaurant into something much bigger:
A brand that other people pay to operate.
