I still remember how McDonald's first crept into my life. My schoolmate had these Transformers-like toys that you could turn from a burger into a robot. When asked, he said that they often went to McDonald's because his single-parent mom wasn't into cooking and got those toys when buying a meal.
I was intrigued but the campaign was already over when I rushed to McDonald's for the very first time. Later on, we spent good times there inhaling helium from balloons and making Ronald the clown angry enough to get us kicked out of the place.
The Product
My relationship with the company has always been somewhat awkward. When I grew up I remember reading and hearing a lot of negative stuff about McDonald's. The younger Bush was president back then and the sentiment toward anything coming from the US was quite hostile in early 2000 Europe. I was always nodding to those arguments, "Yeah, very bad indeed, all that plastic waste and stuff", and that was true but...
Damn. I've always loved the product. It's a guilty pleasure, almost like an addiction, and when I haven't been there for a while I get this uncontrollable urge and I just know I'm gonna fall off the wagon soon.
Most of us have visited McDonald's and eaten Big Macs and Sundays under the watchful eye of that creepy clown. Many of us have also probably worked there during the bear market times or are currently applying for the job. But do you know how the company actually makes its money?
Selling a lot of burgers? Nope.
It's in the restaurant spots, it's in the land. You see, McDonald's mostly owns the land the restaurants are built on. 85% of McDonald's restaurants are franchises that have to pay rent to the mother company. So, in fact, McDonald's is actually a huge real estate empire. Besides that, the company also charges a $45,000 franchisee fee and an ongoing monthly service fee equal to 4% of gross sales.
I'm lovin' it.
Now let's step down one ladder and take a look at how the franchises are doing. According to Business Model Analyst being a McDonald's franchisor is also a highly profitable business with a solid profitability record.
Here are some figures:
- Average McDonald's store generates approximately $2.7 million in sales annually.
- Most generate around $150,000 in annual profit.
Some pretty good numbers. No wonder Ronald is always smiling since the rent, service, and license fees are deducted from the annual sales and go into his pockets.
Will McDonald's be thriving during an economic crisis?
I would imagine the company, or the franchises, are mainly targeting consumers who like to eat out even though the food delivery business has grown exponentially in recent years. Now since hit us, many people are cutting down their expenses and eating out will surely be on that list. However, date nights and such won't have to stop completely, a romantic dinner and a movie will just change from a full-service restaurant experience and silver screens to a more casual spot under the golden arches and afterwards, for the warmth of own home and binge watching series on
That's at least how I see it. People won't stop doing something they like no matter how bad the situation is. They just scale it down a bit. After some people cut down McDonald's completely and some flock from the fancier restaurant scene, I would imagine it'll end up being +/- zero. This is of course just a guess but let's see how the company has done in recent years.
In the chart below, we can see some decline in revenue even before the COVID years but things seem to be picking up again.
I did some research and found out that the company closed over 400 restaurants in weaker locations between 2019 and 2021 as part of its remodelling plan. By the end of 2023, McDonald's also plans to open 1,900 new restaurants globally. That would be a lot of tasty burgers.
The Workers(You and Me)
The bottom step of the McDonald's ladder. In the dark corners of the crypto universe, working at McDonald's has become somewhat of a bear market inside joke and is a source of many funny memes usually introducing McDonald's as a potential place to work. Interestingly enough, here in Finland McDonald's has been awarded the Best Place Work annual award a couple of times(seriously!) and some surveys show that its employees are actually quite happy there. Meanwhile, their main competitor, local Hesburger, has been in the headlines for making their workers cry and feel absolutely miserable.
So, maybe it's not that bad.
Maybe I can see a sign if I stare at the charts long enough.
It's interesting how working at McDonald's has become a symbol of failure in crypto circles. It's like if the revolutionary idea of blockchain should fail and the dream was suddenly over, should we all just go back to running on that hamster wheel?
McDonald's has come to represent the very opposite of the crypto dream - it's where we work hard at a minimum wage for greater capital.
Being around my entire life and probably being around long after I'm gone, McDonald's ain't going anywhere anytime soon. It's a great example of a business model that'll last through decades - people around the world always had hangovers and will always be hungover.
So when our next shift starts, let us meet there under the golden arches on the other side of the counter. On which side is that you may ask, well, that remains up to the market to decide.
Thank you for reading!
Blockchain Games I'm Playing:
- Terracore
- Rising Star
- Army of Crypto
Sources:
The Business Insider
Business Model Analyst
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