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Salty_Employee_8944 t1_j6o9pc0 wrote

Damn. Look how much lower the operating margin is on the operated restaurants vs on the franchises. It makes sense, but cool to see it like this

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IncomeStatementGuy OP t1_j6oft9b wrote

Looks like a 15% margin on McDonald's Corporation-operated restaurants but an 84% margin on franchises. Astonishing. Didn't realize that when I created the diagram.

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currentscurrents t1_j6pf3yq wrote

Of course, that's not the same as the actual profit margin of the restaurant - that's just what McDonald's corporate makes from the franchise vs the costs of what they provide to the franchise.

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ialghamdi1 t1_j6p5l63 wrote

Is it because of the new AI assisted operation we see now in the states?

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Salty_Employee_8944 t1_j6p8p0b wrote

Nah, it's because the franchisees pay for every cost. McDonalds leases the land for them and collects the franchise fees, royalties. It's essentially free money for the company.

When they operate the restaurants there is costs of buying the ingredients, paying the employees etc. And the revenue comes from the burger sales.

On the franchise part the revenue is from the fees, so of course there's not much cost to that. I don't think the burger sales from the franchises even show up on the income statement, that's the franchisees revenue, not the company's

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currentscurrents t1_j6pfewg wrote

Those are overhyped. They haven't automated the actual cooking - just replaced the cashier with a touchscreen. Fully automated restaurants remain a dream.

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