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There's no question about it, McDonald's is the most successful restaurant in the history of the world.
The company isn't worth millions, but billions—nearly 150 billion USD—and that number keeps climbing every day.
Back in the 1950s, the man who would eventually turn McDonalds into an international powerhouse, Ray Kroc, had a lot of big ideas for the restaurant.
But perhaps his biggest idea 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, the world began eating up the brand.
So, it's not surprising that for decades, entrepreneurs have been flocking to the golden arches with dreams of opening their own McDonald's.
But being a franchise owner isn't as easy, or profitable, as you might think.
For starters, buying into a McDonald's franchise is expensive, and if prospective franchisees want to get a piece of the pie, they'll have to bring some heavy coin to the table.
According to Business Insider, the initial investment is between 1 million USD and 2.2 million USD.
That price tag is pretty broad, but McDonald's notes that these costs are based on the restaurant's location and size.
Long story short, it's going to cost a lot more to buy a McDonald's franchise in San Francisco than it is in Saginaw, Michigan.
Before you take the plunge with Mickey D's and start your own franchise, keep in mind that 40 percent of that initial investment must be cash or nonborrowed assets.
Whether it's McDonald's or other fast food restaurants, franchise owners can do pretty well, at least, once they get past their initial investment hurdle.
According to Business Insider, the average McDonald's restaurant takes in around 2.7 million USD a year in sales.
That may not be quite as high as other well-known eateries, such as Chick-fil-A or Panera Bread, but it's still pretty good.
Of course, some McDonald's franchise owners are going to make more than others, but most franchisees pull in an estimated yearly profit of roughly 150,000 USD.
However, after 2.7 million USD in sales, a profit of 150,000 USD isn't even 6 percent.
Once you deduct the price of supplies, food, payroll, and about a dozen other costs handed down by the corporation, that's what an average franchise owner is left with.
The franchise system has been a major reason for Ronald and his company to celebrate since the 1950s, and it's actually how McDonald's makes a significant portion of its profit.
Plus, franchise owners have historically brought a lot more than money to the table by contributing some of the company's most important innovations.
"The Big Mac, the Filet-O-Fish, even the drive-through concept were all developed by franchisees working within the McDonald's framework."
So while McDonald's franchise owners can make a six-figure salary through their restaurant, the McDonald's corporation is making much, much more.
It all starts with the 45,000 USD franchise fee that owners pay.
Then, there's the never-ending monthly service fee that takes 4 percent of a location's gross sales.
After that, franchisees pay a rental fee each month, which works out to be an average of around 10.7 percent of sales.
So basically, McDonald's franchise owners are forking over 15 percent of their sales every month to the Mickey D's machine.
This system is extremely profitable for the Golden Arches.
So much so that only around 5 percent of the McDonald's locations on the planet are owned by the company.
The rest are franchise operations that are paid for upfront by the franchise owner.
According to Reader's Digest, McDonald's raked in 27.4 billion dollars in revenue in 2014, and how that breaks down is pretty telling.
9.2 billion USD of the revenue was from franchised locations and 18.2 billion USD was attributed to company-owned locations.
On the surface, it sounds like the company-owned locations are the real money-makers, but that's simply not the case.
The cost of running a business, especially a restaurant, can really cut into its profits.
At the end of the day, McDonald's only keeps around 16 percent of the revenue its company-owned stores make, but it keeps 82 percent of the revenue franchisees pay out to it.
That all adds up to megabucks for Mickey D's.
So, while owning a franchise should put plenty of food on your table, the McDonald's corporation will take a huge bite out of your bottom line.
"It's like they don't care if you make money as long as they make money."
"What kind of corporation does that?"
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How Much Mcdonald's Franchise Owners Really Make Per Year

5646 Folder Collection
Seraya published on May 8, 2020    Seraya translated    adam reviewed
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