McDonald’s Makes Money From the Ground Beneath Its Restaurants
McDonald’s is known for selling burgers, but its business also depends on controlling valuable restaurant sites. In many franchise arrangements, the company owns or leases the property and then lets a franchisee run the restaurant there. That makes McDonald’s more than a brand licensing its name: it can also act as a landlord.
Why the Real Estate Matters
A franchisee supplies much of the day-to-day work and investment involved in operating a restaurant. The site, however, can remain under McDonald’s control. The franchisee pays the company rent as well as fees tied to the franchise. Rent may be structured around the location’s sales, so the company can earn more when a restaurant does well without managing every shift or kitchen.
Control of a site also gives the company leverage over where its restaurants operate and how franchisees use those locations. A busy corner or a convenient roadside parcel is not just a place to put a sign; it can help make the restaurant easier for customers to reach and more attractive to a franchise operator.
A Different Kind of Corporate Asset
This arrangement helps explain why McDonald’s is often described as one of the world’s largest real estate companies. The phrase points to the scale and strategic importance of its property holdings, not to a business that mainly sells buildings. Its restaurants bring in customers, while the land and buildings can generate rental income and strengthen the company’s relationship with franchisees.
The model’s lasting consequence is visible in the ordinary restaurant transaction: a franchisee may serve the meal, but McDonald’s can earn money from the location that made the sale possible.
