McDonald’s is an American fast-food chain that provides a unique set of foods, including burgers, fries, and soft drinks. Founded in 1940 and operated by Richard and Maurice McDonald in San Bernardino, California, it has become the quintessential brand in the field. The restaurant chain sells hamburgers, chicken nuggets, french fries, milkshakes, and ice cream. They have locations in over 100 countries around the world today. The question asked by most interested investors is how profitable owning a McDonald’s franchise is.
McDonald’s has included franchisees in its system since the mid-1950s and relies on them for much of its success. About 95% of US restaurants are currently franchised to independent businesses, and about 5% are company-owned.
Many factors go into the decision to open up a McDonald’s franchise. The franchisee must consider the location, the cost of buying and preparing food, and how much time they can dedicate to running the restaurant.
McDonald’s is one of the most popular franchises, with over 36,000 restaurants in over 100 countries. This makes it an attractive option for many people looking to start their businesses. In addition, McDonald’s has strong brand recognition and is one of the most profitable franchises.
If you’re interested in owning a McDonald’s franchise, research all your options before making your final decision!
However, this blog post is here to help you make a significant decision regarding investment in one such franchise McDonald’s. So if you are eager to know the insights and stats, continue reading to learn how it happens.
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How Much Does a McDonald’s Owner Make a Year?
The McDonald’s Corporation has been around in the United States since the 1950s. It is one of the world’s largest fast food chains and is headquartered in Illinois. The company is one of the most successful franchises in the US, with more than 35,000 locations worldwide. In 2018, Forbes placed McDonald’s as number 3 on its list of America’s Largest Private Companies.
By analyzing data, Business Insider found that the average McDonald’s location takes around $2.7 million yearly in sales. Most people would be surprised to know that while Chick-fil-A and Panera are much more well-known, McDonald’s sits on their balance sheet as a more prosperous company. This is because they are scattered around the globe.
Recent research suggests most McDonald’s franchise owners are still seeing profits in the $150,000 yearly (as calculated by Fox Business). A significant gain of $150,000 after $2.7 million in sales is less than 6% because of all the other costs tagging along. This means that there’s not much left for a franchisee.
Franchise owners can often turn to McDonald’s corporate for guidance. However, obtaining the approval to open a McDonald’s franchise is more complex than most people think.
How Much Do McDonald’s Franchise Owners Make in the USA?
If you desire to own a McDonald’s franchise, being an owner will have financial benefits. After taking the necessary expenses, net profits are about $1.8 per US McDonald’s franchise.
However, operators also have to pay for equipment and design changes. They must account for increases in secretarial wages, supplies, rent, and the cost of remodeling restaurants. As a result, the cost of opening a new restaurant can be more, and the profit will vary accordingly.
The company plans to invest more in older, outdated restaurants because it knows that their income will continue to grow. But if franchisees refuse, the company will push them out of business by not renewing their franchise.
Franchising can be profitable and is often open to those demonstrating at least $600,000 in liquid capital.
Is It Worth Investing in a McDonald’s Franchise?
McDonald’s is one of the most well-known fast food chains ever. They have over 30,000 globally, with about 14,000 locations in the United States alone. This is due to their long history of franchising back since 1955.
To earn the kind of profit that McDonald’s franchisees have, you would have to invest $1.8 million and make around a 10% ROI in 8.5 years or less. The US median net sales of a McDonald’s franchise was $2.9 million in 2020, so these numbers are calculated on that basis. Outlets in the US did indeed close down in 2019 and 2020. This may be attributed to COVID-19, also known as the pandemic, which caused a significant economic downturn. The franchisor believes McDonald’s is very profitable and can be worth upwards of $2 billion in profit each year.
We advise people interested in owning a franchise to speak with at least five existing franchisees. A better understanding of their business and experience will help you decide on the best strategy to own a McDonald’s franchised restaurant.
FAQ
What Is the Position of McDonald’s in the Fast Food Industry?
McDonald’s is the leader in the fast food industry, with its presence globally. Its competitors include Burger King, Wendy’s, and Five Guys.
How Much Does a McDonald’s Franchise Cost?
If you’re considering starting your own McDonald’s franchise, the cost to follow that path often starts at around $1.3 million to $2.3 million. This includes an initial fee of about $45,000 that must be paid to the supplier/legal entity for giving out a franchise license (franchisor).
Why Is McDonald’s So Successful?
McDonald’s is a very profitable business, and they recorded an average net income of $2.338 billion in the three years of 2020, 2019, and 2018. Franchised restaurants generated nearly 5 billion dollars in revenue on average each year. It is an indicator of the success of the McDonald’s franchise business.
