McDonald

McDonald's is not a burger company. It is a real estate company that happens to sell burgers. Ray Kroc understood this before anyone else. When he began franchising McDonald's restaurants in the 1950s, he set up a structure that would become one of the most ingenious business models in history. Kroc did not just sell franchise rights. He created a separate real estate company that purchased or leased the land underneath each restaurant, then subleased it back to the franchisee at a significant markup. The franchisee runs the restaurant. McDonald's owns the ground it sits on. Today McDonald's owns or holds long term leases on the majority of its roughly forty thousand restaurant locations worldwide. Franchisees pay rent based on a percentage of sales, typically around ten to twelve percent, on top of their franchise fee. This means McDonald's revenue increases automatically when a restaurant sells more food, without McDonald's spending a dollar on ingredients, labour, or operations.