How McDonalds Make Their Money Through REAL ESTATE?.
Hello. My name is Samuel Leeds and I am your property guide. Today, I will talk to you about how McDonalds makes money through real estate. It is an interesting video and I am sure you people will enjoy it and get educated also. You definitely heard this before that McDonalds is actually a property developer and not a restaurant. Also, it doesn’t make money by selling its hamburgers and fries but they made it through real estate. In this video I will tell you how this business works and how smartly their business model is operating. I researched a lot and put all my energy and time to take out the best of information for you all. Let’s begin.
McDonalds Business Theory
So, basically what other restaurants do is, they lease a building or buy it for a food business purpose then they pay mortgage if on lease and make money from selling their food. With the money they are producing, they pay bills, mortgage or staff fees and all. Then they left with the profit. This is how they work because they are doing food business and it depends on every restaurant whether they lease or own the building. But McDonalds is totally different.
They buy a piece of land and develop their building. Now you must be thinking that why don’t they directly buy an existing restaurant, why do they build? Well, if you have seen the McDonald’s building, it looks perfect and attractive while having your meal. But would you like to take your wife on a date here? No maybe, because the ambiance is not like that and you know it is so cheap and all plasticky. Actually they buy buildings in bulk at cheap rates and they use cheap plastic material in their restaurant.
You might have seen how fastly McDonalds built, you never see that there is McDonalds constructing and all and it’s taking six to twelve months to develop. No! It just builds in a few days because they use cheap material and faster work. After that what they do is, they sell their restaurant or building to the franchisee in other words to a tenant. And that franchisee will pay rent and the royalties to McDonalds and this is only based on 20 years of contracts otherwise McDonalds won’t give it. This is really effective as a cash flow for McDonalds because they put the franchisee into the building for a 20 years contract and after that franchisee will start paying rent to McDonalds.
Here is the victory of McDonald’s as the commercial properties that are used as a business or restaurant purpose, their value is based on the rent. If the rent is high then automatically the value of the building will push up. Here is the same with McDonalds, their building value rises just because its rent is high. Even, they do not look into the interior or it is not their concern, they just make the building overnight probably and the value is pushed up. And you know what, its value will continue to increase after 20 years of contract because they know that real estate holds its value.
The CEO of McDonald’s Ray Kroc realized very early that he is in the real estate business and not in the burger business. You must watch the McDonalds movie named ‘The Founder’ where Ray Krock expressed how he figured out he is in the real estate business. He spread the scale of his business after taking over from his brothers. Now the turnover is in the billions of pounds every year. Only a small amount of profit is generated from food, other is coming from the franchisee. They are making money from the franchisee and not from the food. Because McDonalds knows how to make money smartly and with real estate, no earning is better than this.
Many companies are doing it and you don’t even know this. I met my friend, he is quite successful, he has a car company and sells cars. But when I met him after a long time, he told me that 80% of his earnings are from real estate. This is incredible.
There are many ways to do real estate by using different fields as well. Hope you find this video interesting and full of knowledge. If you want to learn real estate and how you can make money in real estate then you can join my property investment education courses where you will meet me in person and learn lots of stuff regarding real estate. I will help you to set up your own real estate company and earn massively. I am attaching the link in description for you to join my courses.
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