CompanyGraph
McDonald's Corporation
MCD · NYSE Arca · United States
McDonald's owns or leases the land under 43,000+ restaurants and charges franchisees rent to operate on it.
McDonald's doesn't primarily make money selling food — it makes money as a landlord. The company secures ownership or a master lease on each of its 43,000-plus restaurant sites before a franchisee can open, then subleases that site back to the franchisee at a markup, so roughly 60% of total revenue flows from rent rather than burgers. Because the franchisee's operating licence and physical location are bundled into a single agreement, walking away from the brand means surrendering the property too, which is why 20-year exclusivity terms and McDonald's-specific kitchen equipment make switching effectively impossible. The whole structure depends on McDonald's continuing to act as both franchisor and landlord at once — if regulators ever forced those two roles apart, the rent premium would disappear and what remained would be a plain 4-5% royalty stream, the same as any other fast-food chain.
How does this company make money?
McDonald's collects monthly rent from franchisees based on the real estate leases it controls, royalty fees of roughly 4-5% of each franchisee's gross sales, and one-time fees when a new franchise location is granted. It also earns revenue directly from the smaller number of restaurants it chooses to operate itself rather than franchise out.
What makes this company hard to replace?
Franchisees are locked in by 20-year territorial exclusivity agreements that bar them from switching to a competing brand within their defined area. On top of that, each operator has invested heavily in McDonald's-specific kitchen equipment, point-of-sale systems, and restaurant buildouts — switching brands would mean scrapping all of that and starting over from scratch.
What limits this company?
Adding a new rent-generating location takes 12 to 24 months because every site requires its own lease negotiation or property purchase, plus approval from local government before construction can begin. No amount of franchisee demand or brand strength can speed up that process — the company can only grow as fast as individual site approvals come through.
What does this company depend on?
McDonald's cannot operate without Coca-Cola for fountain drink supply agreements across all locations, SYSCO and other major food distributors for frozen beef patties and standardized ingredients, Tyson Foods and Keystone Foods for chicken products, Taylor Company soft-serve ice cream machines for dessert operations, and local municipal authorities whose permits are required before each individual restaurant site can open.
Who depends on this company?
More than 40,000 franchisees rely on McDonald's brand recognition and operational systems to bring customers through the door — without that, their businesses have no foundation. SYSCO and the major food distributors that supply the network would lose a significant share of their volume if the restaurant count shrank. Commercial real estate developers in secondary markets also depend on McDonald's as an anchor tenant that draws other retailers into strip mall developments around it.
How does this company scale?
Standardized recipes, training programs, supply chain purchasing power, and brand marketing all replicate cheaply as new locations open through the franchise system. What does not scale easily is finding and securing each new site — every location still requires individual market research, a separate lease negotiation or property purchase, and its own local government permits, none of which can be automated or handled centrally.
What external forces can significantly affect this company?
Minimum wage increases in major markets squeeze franchisee profits and make them less willing to open new locations. Commodity price swings for beef and wheat push food costs up across the entire supply chain. And a long-running shift in consumer habits toward healthier eating reduces demand for traditional fast-food menus.
Where is this company structurally vulnerable?
If regulators required McDonald's to separate its property business from its franchising business — or banned a franchisor from also acting as its franchisees' landlord — the rent and royalty payments that are currently bundled together would be split apart. McDonald's would be left holding expensive upstream lease obligations while collecting only a standard 4-5% royalty on sales, the same as any other fast-food franchisor, and the real estate income that defines the model would disappear.
Supply Chain
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Coffee Supply Chain
The coffee supply chain moves beans, roasted coffee, and espresso from tropical farms to global consumers, shaped by three root constraints: coffee trees take years to mature and produce one harvest annually, roasted coffee degrades in weeks while green beans store for months, and production is concentrated in the tropical belt while consumption is concentrated outside it.
Beef Supply Chain
The beef supply chain is shaped by three root constraints: a biological growth cycle that delays production response by 18 to 24 months, a cold chain dependency that requires unbroken refrigeration from slaughter through retail, and processing concentration where four companies handle roughly 85% of US beef — a structure driven by the capital intensity and regulatory burden of large-scale slaughter facilities.