How McDonald’s Really Makes Their Money (It’s Not What You Think)

by birtanpublished on October 1, 2020

I don't want you to just watch and learn
from me and not take action

the story is one time Reiko was speaking
to a group of university students assess
the students you know what business do
you think I'm in all the students are
saying all ray of course we know you
sell hamburgers and fries you in a
hamburger business and Ray said no I'm
not a ham because this is out in the
real estate business that's partially
true that's what most people know I'm
gonna give you something more advanced
you want something more advanced okay
that's what people think of it has
evolved a lot first of all
McDonald only some of the big most
expensive real estate in the world they
have a lot of different locations the
the only reason they offer fries and
burgers and all that they are really in
three businesses one they are what I
call in the business in a box business
something called the franchise business
I call the business in a box business
okay so people buy McDonald franchise
they're buying business in a box is
turnkey walk-in ready to go why they
need to sell the the the fries and
burgers and all that because it is cheap
mass appeal because they need the
franchisee needs to be able to make a
decent income so that to pay McDonald
the rental income so McDonald goes in
the box this piece of property built it
which they do you think they have a
proven system how to build these things
and a good cost quickly you bet if you
build tens of thousands of these right
franchisee comes in pays them money to
which is well now one point some
$1,000,000 right to buy McDonald
franchise which they would guess what
leverage dad to get the financing to
build this thing so there's no money out
for them but they owned a piece of real
estate that you you you're leasing now
and you buy oh yeah you are built in
tenant so that's the first business they
so they sell you the business they make
money up front
they own a piece of real estate they
make money monthly but that's not the
biggest business
the third business is not even the
royalty they get the royalty income –
yeah multiple streams of income right
there but the biggest business they have
McDonald right now is the largest
suppliers to this your straw your napkin
the burger meat that's where the
business is they're not in the retail
business anymore they're in a
wholesaling business big thing about the
volume it goes to McDonald so because if
you only have a retail business it's a
they don't touch the retail that's not
retail it's expensive so the minute
minimize the risk by having the
franchisee pays one because they develop
this phenomenal business in a box and
then you have the real estate which
builds massive amount of wealth they can
refinance get in a location or all kinds
of stuff they can do and third
wholesaling just all day how many price
they supply every day to the world how
many burger meat how many nuggets how
many like this is why McDonough is very
strict you're never ever bought you
cannot they say if I'm a franchisee and
I could find someone I can find
somewhere can buy napkins cheaper can i
buy that no every single thing that
about the McDonald from the napkin from
the straw from everything from the the
paper that wraps a damn burger
you have to buy from McDonald everything
I don't know I'm not so sure if they
even I'm not sure I haven't done my
research this one I don't know I'm just
guessing they might own some shares in
coca-cola I wouldn't be surprised
because they don't have Pepsi don't have
coca-cola vice versa maybe coca-cola
only some shares on it I haven't done my
research I'm just guessing that's what I
would have done right because if I'm the
JV partner coca-cola in autumn ik
Donnell I'm well on the shares and get
some dividend income and it's a
statistical lines anyway more money they
make more money I make so you see it's
not very obvious a lot of these things
you think all they make when it's only
hamburgers it's a very low level a way
of going beyond the business you look at
this I call they make a lot they make
all
2po streams of income and and then it's
kind of real estate play in it which is
lilian case think about it someone buys
a franchise let's say the franchise
doesn't work which is it could happen
not often McDonagh buddy could what's
their risk they take it back
they sell it again and then so think
about this right you bought I'm a
McDonald you bought a franchise for me
and then we're running it it's not quite
working you put a million dollars I'm
sorry man it's not working out and then
you're like oh man but I'm on a hook on
a lease for like 10 years you know what
no worrying it's okay no you can exit
you lost a lot of money of your back
foot right now take back but I guess but
you're on the hook for the lease right
so don't worry about that not with the
next person he said he's already to go
McDonnell franchise you know usually
when you suffer a scratch it's a million
bucks take it over half a million I'll
make it work for you I'll make it work
for you you know right I just have an
outer tendon I already collect a million
upfront and now a supply now I go in
with my expertise McDonnell see we can
fix this location they actually would
make more money
I'm guessing this selling a second time
that's all my costs are recouped it the
second time this is free money they
would be more profit or selling a second
time if I'm guessing I don't know I have
a look at a financial I'm just guessing
right

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