@@ZeeengMicro They're a dying business, where no one wants to eat, and many of the restaurants are closing down. They've been closing down around a thousand locations each year since 2018. It doesn't take a great mathematician to understand that they aren't going to exist for much longer at that rate.
An operator or franchisee told me that as soon as the restaurant became profitable...Mcdonalds pushed him really hard to sell the business. They are very smart making you take all the risks and handing out the fruits of the labor on a silver platter.
You think that is bad? In India, they muscled out the Indian franchisee after he had spent around two decades building up the brand from scratch. And it affected nearly two dozen locations
@@mikepekala832 McD's exists for one reason and ONE REASON ONLY, and that is profit maximization for Warren Buffet. Everything the man touches, eventually turns to shit.
Let's do some really easy math. Requirements for McDonald's Franchisees: $500k in liquid assets plus a $45,000 franchise fee. According to their own statistics, gross revenue is about $2.7 million, with net being $150,000 according to Mashed. An annual 30% net profit for that much effort is not terrible, but with long working hours, remodels (which were not accounted for in our little calculation), and external liabilities (vandalism, crime, natural disasters, and really any other freak accident), that's a lot of work and risk of profit loss. Now, let's invest the 500k into MCD, which has paid a consistently growing dividend for 47 years, and is on track to become a dividend king. Currently it sits at a 2.2% dividend. That's $11,000 for doing absolutely nothing. It can go up and down, and you can effortlessly invest more if you like. But the biggest value is the time you get to do absolutely whatever you want.
You're missing a few things, equipment (350,000 to 700,000), leasing and purchasing of McDonald's real estate (400k-1.8 mil) or signing of a lease (unknown), construction and remodeling if you pick the location (250k-850k), initial inventory (60k-80k), secondary fees (depends on lease agreement, unknown). Depends on if you choose to get a loan from corporate or not but the initial fees can get pretty crazy. But if we take the known elements (equipment, 350k-700k, inventory 60-80k and the initial 500k and 45k requirements you have to pay around 955k- 1 MILLION and 325 thousand dollars. That would be an annual dividend of $21,010-$29,150. Average McDonald's operator controls a store for 20 years. From 2000-2020 average annual return was 11.8% you would gain an additional $112,690-156,350
@@jeez5735 oh yeah, I vastly oversimplified. But when you add those details in, it's even more demonstrable that you're better off just buying the stock than opening a franchise for the same cost. And by cost, I mean in terms of both time and money
$150,000 profit from $2,700,00 sales is absolutely horrible. Anyone who signs up for that or thinks that the work for those sales is worth $150,000 is in need of a math tutor.
@@Lee-ed9wv Yeah. On one hand, turning a net profit at all is a feat in of itself, especially within the first few years of business, and also that in the food industry, with its incredibly thin margins and cutthroat nature of competition. A six figure profit is a pretty solid return, especially in such an unforgiving industry. But the profit to working hour ratio is absolutely horrid, like you said. With lots of franchise owners reporting 80 hour work weeks, around 50 weeks a year, which comes out to about $37.50 an hour. I couldn't find the time period of when those profits emerge, so this could be within the first year, or it could be five years in, in which case there is some survivorship bias. Granted, this isn't my industry, so I can't speak from firsthand experience, but I can speak with regards to the nature of profit by itself, and the reports put out by current and former franchise owners.
This is not the McDonalds I grew up with of the 1960's. The food quality changed and evidently the relationship to their franchisees. McDonalds are not the only retailer that has gone into real estate for profit. Also the stores are harder to access them from the roads. I noticed that I had to make a lot of left hand turns to get in and out of many of locations. Some of the employees are playing a "pajama game" with the service such as keeping the lids to the drinks half tight causing spills. I noticed that the parking lot of the last one I used to get breakfast while traveling was cratered with drink spills. No more.
Dude I thought it was just me, McDonald's has some of the consistently weirdest entrances, parking lot layouts and drive throughs. If I need to walk in it feels hazardous because I'm always crossing traffic no matter where I park, blind/tight corners or really tight drive lanes--just weird lot planning all around.
Walmart also buys and sells and leases or rents real estate, how many other companies do it I don't know. Many huge corporations run multiple businesses.
About 20 years ago, the McDonald's near my place that's been around for decades lowered their standards. The staff would argue with customers about little things, they would overcharge you on combos meals, they would double charge you with the credit card and in 20 years, I haven't had my orders filled correctly...EVER. There's always at least one thing wrong. When I do order from them, I empty the contents of the bag and open up the burger boxes to see what they did wrong because I know I can't trust them to get it right. I've seen instances where they forget the sauce in their big mac or forget a meat patty. I thought it was all McDonalds but the one 10 minutes away across town doesn't have that problem. It gets my order correct, the staff is not rude, the place is clean.
That's one of the many problems with the franchise model... there's no universal standards for doing business, customer service, quality control. I worked for them years ago, I got fired or laid off for unknown reason so I go to call their franchise owner office and they supposedly don't have records of the event even though I still have pay stubs. Lack of quality control, massive indifference from corporate. Food keeps getting more expensive. I just go to In N Out for fast food or anything else other than McDonalds.
@@Filthyserb262 he worked for one of Mc Donalds, got to know their shits and never ate from one since then. If grammar is wrong feel free to correct. Thank you in advance.
I got a big mac with no hamburger patties! I have seen many issues but I will never forget my vegan big mac. I never thought I would have to ask where was the beef?
7:20 it sounds like McDonald's is more like a pyramid scheme. If their main money makers are the operators and not the people they are selling the burgers to.
More like a Multi Level Marketing company. “Only 10k to sign up to our ‘brand’ and get the starter kit of ugly leggings to sell on Facebook!” McDonald’s is that but as a restaurant
I use to work for McDonald’s back in 2000-2002. The store I worked at when looking at their monthly, quarterly profits… the franchisee was making well over $10-$20 thousand a month per store. Managers were making $6 thousand a month. Their profits were ridiculous so remodeling was an option. Now because of wages and inflation I can understand why they are bailing from this. Side note burgers like a regular cheese burger would cost 3 cents to make and the cost was 49 cents to the customers. Mind you I’m not adding the shipping, cost to keep the building going and all that jazz.
I’m currently going to school to get a business degree and a management degree to become a owner operator I live in San Diego and starting to see the impact of these franchises I’ve worked with 4 out of the 5 franchises here in San Diego. I have worked along side one of the operator’s for 2 years to eventually seeing the sad reality of him selling there was a store he owned that needed to be remodeled 3 years ago after him eventually selling the McDonald’s finally got a remodel and is now open today. the director of operations always use to tell me we have no money I use to think to my self how but after doing lots of research i now see he was sucked up in the corporate greed and it’s sad that future operators will never have a chance nor something to pass down to there kids I’m 21 and very interested in becoming a owner operator also most these locations are passed down generation to generation which helps with 1m and the 500,000. Great video there’s a big problem in Cali rn with McDonald jobs the 20$ a hour didn’t help
Restaurants must be remodeled every 10 years and that means tearing out perfectly good floor tile, seating and dining areas, ceilings and even the restrooms. None of this is payed by McD and the current price for this is $700k to $1m. Doesn’t matter if the decore is in perfect condition it still has to be ripped out and put into the landfill.
it's astonishing how much quality has fallen for the McDonald's restaurants near me. When I was a kid it was a treat to go to McDonald's. I only went into a few different McDonald's in recent years when I was in a hurry/didn't have a choice. To start off they are so dirty I don't even know how it is allowed, there is no way any quality checks are being done, eeven in the outside it looks like a run down building, lights are broken, garbage all over. I got a cold hamburger and french fries that tasted like cardboard. Meanwhile, a Chick Filet opened for the first time in my area a couple years ago, the place is packed all the time. Where I think where McDonald's messed up is they tried to make fast food "healthy", it will NEVER be healthy (it's processed/packaged food that is mass produced). Whereas In-Out-Burger doesn't freeze their burger patties, that is why they cannot open a franchise on the East Coast. If you are going to open a fast food place, do NOT try to offer 'healthy' food options, just go for high fat, great taste (the place will be busy, ESPECIALLY when there are periods of economic downfall, people aren't worried about long term health during those periods, they want simple pleasures that don't cost too much).
We have been going to McDonalds less and less since too many of the franchises are down right nasty. I called McDonalds corporate and asked for a list of corporate run locations. Since McDonalds went to the McCafe design we rarely patronize we have Whataburger, Freddy's, 5 Guys, In and Out burger, Dairy Queen. I even gave up on Wendy's and Burger King. There is a shift in the fast food industry or as they want to be called the quick food industry.
8:21 At the beginning of the pandemic the Fed cut interest rates to zero? My friend, the Fed started cutting interest rates back in 2008 and we had been setting at zero percent for years. Only recently, due to inflation, has the Fed started raising interest rates again and that is not a good thing. The Fed is not a good thing.
In 80s, McDonalds had many more restaurants than Burger King in Norway. Today, Burger King har more restaurants than McDonalds in Norway. At olympic at Lillehammer in 94, the sued a old hamburger restaurant who had started in around 1960. It was called McDonald, and McDonalds didnt like it. Problem was for McDonalds this restarurant started long before McDonalds was a wellknown brand. McDonalds lost the case. How stupid this is, shows when i tell u its One restaurant with name McDonald in Lillehammer.....
The model is predatory in nature, heavily skewed in favor of The Corporation, which does better and better the more "wealth" it extracts. The corporation doesn't care, until its "clients" run dry or run out. Even the greatest predator will go extinct if the prey doesn't "offer" enough nourishment, or altogether isn't to be "found" anymore. The biggest dinosaurs of old have disappeared, leaving only meager birds (puny, in comparison). Gone forever are the plant-eaters supported by bones with growth rings like trees - because the lush vegetation they fed on is gone, along with the humid CO2 atmosphere that created that vegetation (and the higher O2 levels it created). Just like dinosaurs, corporations will find life harder and harder, begin to gasp for air and dine on scraps, realizing too late that the good times will not return before they die, or at all. Others will dine on their bone marrow and emaciated corpses. Corporate Corpses..... They're already dead, just don't know it yet.
McDonald's has such a small profit margin I remember wondering how they ever make money in the first ten years without over working minimum wage workers and somehow having less waste without running out of food.
@@micahjohnsonboxing6409 what? Wether or not you can go bankrupt doesn't mean anything. The stock market has a different risk profile than a restaurant. Some prefer one over the other but you can't just make the two equal because they aren't.
When you buy into McD, you should already know you're not building up your brand. Also, you're not starting a new company. McD already has a reputation for good or bad. Most restaurants are out of business within 3 years. Most people who buy in already know what they are in for. I know of a few McD that are busy all the time, and when you ask people why did you go to Subway, they say, "There wasn't a line."
I honestly thought the movie, "Super Size Me", would have hurt Mcdonald's more. Apparently, cheap, convenient food trumps health concerns. I don't believe their food is much healthier than it was before. Escaping corporate traps is more challenging than ever. I guess the "lives of quiet desperation" are doomed to continue.
The food is crap now since the pandemic and way over priced. I eat at Chilis for the same price as a Big Mac meal and i can sit down and enjoy my food. Even Arbys is cheaper now.
You think ppl feel like a customer for that. Then don't try and run your own business. Small business spend 100% of there so called money on renovations
Also, do not forget that during the remodels, the operator does not have any income from the store. Our local store was down for a year due to remodeling.
@@LogicallyAnswered I recall when my local mcdonalds was remodeled in south africa. In our country we have a sort of construction mafia that wants a cut of all construction work. the store was closed for over a year due to these sort of issues. I know from talking to the owner that it was one of the most profitable ones, but he had to take on massive loans in order to keep the business.
@Ask Grant We actually have the exact same thing in the US, except they all work for various government agencies with redundant jobs, regulations, taxes, and inspections.
I can not fathom why operators would put money into land they do not even own as most people who are craving mcdonalds do not even care what it looks like as long as it appears clean...
McDonald's lost all personality with the remodelling. It went from "a cool place to eat with your family" to "bland corporative food chain you eat sometimes on lunch break"
Exactly I worked for them for 12 years after the “remodel “ of ours to resemble Starbucks the quality of the original Mc Donald’s slowly began its decline.
McDonald’s was never a cool place to eat wtf kind of corporate shill nonsense is that. You are a drone who fell for the nostalgia of a corporate brands identity. Wake up, and stop reminiscing about a fucking fast food place.
It’s credibility and food that being served to customers people are questioning contents of food that serving that gates is heavily involved in negative aspects pushing to MCDONALD People need to raise up and demand that feed us normal menu of McDonald instead allowing these psychopaths to alter our food at McDonald!!! Power to the People’s 💪
Hey, I have an idea: let's get government to raise the minimum wage! $15/hr ain't good enough, so let's bump it up to $20/hr. What could possibly go wrong?
@@demef758If the only reason your business model succeeds is by keeping its employees in poverty, then your business model doesn’t deserve to exist - at the very least, not in the wealthiest country in human history.
@@demef758 we saw a help wanted sign for $20 an hour in the window of a local Japanese restaraunt. They still couldn't find help. They were closed and I don't doubt they close permanently, very soon.
@@demef758 Let’s keep repeating years, old, memes, and keep pretending they’re real. No, you’re paying for the million dollar remodels. How much do you think that goes in to each burger?
Exactly. We are set to have a great reset in our lifetime. Im jealous baby boomers never had to experience it. Hopefully sooner than later so I can enjoy my end of life knowing I left a better word behind like ww2 vets.
That’s net profit so assuming you put yourself in the payroll somewhere you would have 150k left over AFTER everything was paid. If you just put the profit in the bank after 10 years you’d have $1.5M.
@@jaymarcase9737 Yeah thats not really worth it when the stock market will give you a higher rate of return than that. Owners had to purchase those TV menu's for around 150k... F that. THe KIosk was also around 150k. Seems like its hard to rely on that rate of return when you have a coorperation that is constantly making you upgrade.
@@user-ec6ej4dp6t the stock market CAN give you a higher rate of return but it is not guaranteed. You have to have enough runway to ride out the downturns.
@Jay Marcase If you have like 5 mill in PepsiCo stock for example, you could literally just live very well off the dividends including a 50% tax on the money. That's not even doing anything and just collecting, plus your money is pretty safe.
As far as ik 150k is after paying yourself a salary or someone else, if u own many and wwant to be passive investor. idk actual no. i just read it somewhere so correct me if I'm wrong. but 7.5% return isn't that good given risk and work. i would rather just buy some reit or simply real estate and if someone with more risk tolerance stocks
I used to like McDonald's breakfast burritos on Sunday. One Sunday, the drivethru line was very long and the wait longer. I had time to figure in my mind how much it was going to cost. This was before it was more common to use a debit card. When I got to the window the woman told me how much my order was. it was like three bucks more than it should be. Being cash, she was overcharging people and pocketing the difference. When I challenged her on the price she backed off. They were very ghetto and dirty on the inside and outside. Never went back. They only stay in business because of the Interstate exit is a few blocks away.
That's crazy. $1-2 million to buy the franchise, $360,000 to remodel, $30,000 technology fee and you STILL need to pay McDonald's monthly rent?!!!! That doesn't even factor in the mandatory ice cream machine vendor repair fees. 🍔🍟🍦
and you still are leaving out property tax, payroll taxes, income tax, property insurance, workers compensation insurance, hiring the staff, managing the staff, purchasing, maintenance, etc.
@@ObscureManifesto those are normal expenses that ANY business would incur, though. And a franchisee is NOT going to pay property taxes, since they don't own the property. McDonald's Corporation is the property owner for more than 90% of all McDonald's franchises. This is all in the video. 🎥
@@ObscureManifesto not saying you are lying, but generally, landowners pay the property taxes. It is public information that McDonald's owns more than 90% of the land under each McDonald's franchise. McDonald's Corporation makes the majority of their money buying and selling real estate, which was sort of the point of this video. On the other hand, McDonald's "buys back" the franchise, so that seems to imply the franchisee owns the title to the property. Definitely one of those "grey areas" worth looking into, but I would be skeptical, because as noted in the video, McDonald's does subsidize the construction costs. Technically, that means they could claim at least partial ownership of the property, and thus responsibility for at least part of the property taxes. 💁🏻♂️💰📜
I work in healthcare administration. I owe my overpaid bloated salary to loyal fast food customers! Every McDonald's regular is about a quarter million of billable procedures and office visits over their lifetime. Murica
So to hell hundreds of thousands of workers, something millions of people love, destroying billions of dollars for the economy every year... Yeah, you're intelligent. Not.
I'm glad someone finally covered this. It has been going on far too long. In Australia, the employees are treated poorly simply becayse the licensees are under massive financial stress. They only staff half as much as they should and who could really blame them? I've seen the contract they enter into and there is no backing out of it. You are forced to run the business for years or see massive losses. Imagine the time wasted just so you don't lose money on your investment, all that time you could spend investing elsewhere if you even have money after. It's insane, corporate is squeezing everyones throats and people are complaining about the economy: renters, landlords, fed. WHAT ABOUT CORPORATE???
Things I learned working at MdConalds: 1. You need good workers who are willing to work. Replace the bottom half who slack off for good workers if you can, even if you have to pay a bit more. 2. Salt the burgers before pulling them off the grill. It makes them much better 3. Use the bin timer and throw food out when they expire. Fresh food is SO much better, especially for reg meat/quarter meat. 4. Night shift is a lot easier, but customers are NUTS :P
So your plan is to get the best of the best workers, but pay the minimum wage. No wait pay them slightly above minimum wage. Most workers don’t stay at McDonald’s. You have constant turnover. Good luck, keeping your golden staff.
Honestly, if mcdonalds wants remodels, they should be one to foot the bill. After all, if business is just fine as is, why should franchisee do it? Besides, they are the landowners anyways. Also, as usual problem is that just some soulless corporate people are grasping at every single trick to achieve infinite growth, well, growth for next quarter so they get bonuses. Usually problem is that when business becomes big, an corporation, they start to use their money, power and financial tricks to make profits instead of making better products. I mean it's much easier to just extract money from someone, use trick to supress/defeat competition, rather than actually competing in fair race. It just always amazes me how business kind of inherently evil, it can be good, but only if business culture is carefully managed by good leaders and investors, but in the end unless this culture is carefully protected, business either stays small, fails or becomes huge soulless machine that just does whatever for profit as long as they can get away with it.
@@CheesyLizzy it's the cost of cleaning the play spaces. That's the reason, and it's good from the operator's point of view, at the detriment to consumers
@@GyroCannon idk man at the McDonald's I worked at we cleaned the play station professionally 1 time a month. Idk the cost but I'd be surprised if it costs that much. Rest of the time we swept it and wiped the tables
This is why I always believed mid-sized companies are the best, and this belief always gets reproven time and time again, not small enough to have subpar QC and aesthetics, but not big enough to listen to mostly only investors & shareholders, use consumer engineering, psychological tricks, FOMO, exploit grey areas in laws and contracts, etc.
Over the years I have looked at many franchises. I passed on everything for one reason or the other. McD was the worst franchise agreement. 7-11 had one of the best.
7-11 is basically what's called in my country a Sari-sari store(7-11 is a version with a room they can walk-in with AC), and a sari-sari store anyone can start it here no license or local permit nor anything. Just google "pinas sari sari store"
I grew up going to, AND working at, this place. One day about 30 years ago I was at the counter ordering a Hamburger - .79 cents and I requested extra pickles which the gal attempted to charge me .30 cents extra for. I told her to keep it and I would NEVER be back. Fast forward 15 years and a friend bought lunch for us while we were working and, after 15 years of never going back, there it was sitting right in front of me - a Big Mac - which I will admit - I absolutely LOVED them growing up. When I opened the box I was stunned at how much smaller it was then what I remember them being but I quickly ignored that and grabbed the burger with surprising glee - This feeling, however, ended very quickly as soon as I bit into it. Beyond revolting. Unbelievable that they are actually able to label this as "Food". This company has one of THE largest R&D divisions of any company. They literally chemically screw with this "product" in order to give it a weird, almost addictive, quality. In 30 years The only time I EVER would go into one of these places now is to use the toilet. From what I leave behind it isn't too different then what they sell - Theirs just smells....different.
"When I opened the box I was stunned at how much smaller it was then what I remember them being" Child of the 80's and 90's here. The shrinkflation and reduction in quality are real. With everything.
I agree I was telling my wife how small the burgers are now and The Taste is horrible compared to what they were in the day you want to try another burger that sucks try Burger King they suck bad lately cardboard meat
This is what a franchise is all about. The franchiser carries little risk for huge profits and the franchisee carries most of the risk for little more than wages. Why would anybody get into a franchise?
my uncle owns multiple different franchises and he explained it to me like this. When you own a restaurant managing your supply lines, logistics, food quality and branding take up a lot of time and resources. Franchises give you a formula where you know if you do x you get y and a lot of the guesswork and variability is removed from the equation. Managing staff, customer satisfaction and the other dozens of variables in a restaurant takes a savant or a team of people. In a franchise you are paying someone else to manage a substantial portion of the variables that you are not able to or would need to hire people to do for often more than the cost of the franchise fee. But this information is second hand. I have no personal experience, but this is what I was told.
@@jacsonater You got it right. A friend of mine had a franchise and left it to start a restaurant on his own. He said he traded one headache for another. He's happier now though, makes a better profit and retains staff for years as he can pay more and give little perks to the staff as well. He also works 8 - 10 hours more a week on supply and delivery etc.
because most of these folks inherited their money and are dumb as rocks. So they buy a money generation machine. All you need to open a restaurant or bar are Good staff , an appealing idea and intelligence. Most of these folks resent paying the serfs at all and believe the world owes them
I knew someone who sold off his franchise, and I stopped eating there after hearing the stories about his relationship with the corporate offices. Turning your business partner into a customer isn't something I would recommend doing.
This was super interesting. I was looking at investing in McDonald's as a long term dividend hold, and this is the sort of thing that just would not come up in my investment analysis.
We went to a dine-in lunch for two at McDonald's just prior to the health crisis. Half the place was under construction. The other half was crowded with loud and unruly people. Two burgers, fries and drinks were about $25. That was my last trip there. Two great burgers and fries (no drinks) at In-n-Out cost us $9.79.
It's great to hear operators are pushing back. Personally I think McDonald's collapsing would be a great thing. It would at least get them to re-evaluate their behaviour
Worked at a Mcds during all those remodels. Which was a nightmare also. The state had 3 contractors that worked with Mcds, with all the remodels they needed more, so the store I was at got a new contractor and it was just problem after problem. Some of which was just a bad job. No conduit was ran in a wall that was already tiled for the front registers. Tables were put in after tile on the floor was done, but drilling out the concrete putting the table in and filling it with concrete. No problem...until they slopped the cement to set the post on the finished tiles and didn't clean it up and let it dry... Guess there something like 70 problems and the finish walkthrough.
I just went to a local McDonald’s last night. A fish sandwich meal with medium fries and a strawberry shake, plus a two-cheeseburger meal with medium fries and a coke - $21 and some change. I’ll be helping that location go bankrupt by never going back. The food quality is terrible at McDonald’s so no way I keep spending that kind of money on their food.
I was thinking the difference between Mc Donald's and a pyramid scheme are minimal. - You get franchisees because they want to be "independent entrepreneurs" - The business opportunity in not so shiny as presented - Larger part of profits is made of internal purchases rather than external ones - Only a little percentage of employees and operators earn reasonable salaries and returns on investments - The "core" of the company is disinterested on how the employees fare. - You have required corporate expenses to cover with your own revenues.
Mcdonalds are so different from location to location. Some locations are fast and friendly and others are rude and slow. I also noticed that the good employees jump around to other locations. I also know some nice young people who applied to work at a location and got an interview and never heard back. Meanwhile that same location has major issues and is slow. Mcdonalds is going to fail if they don't get all of their store up to standard.
McDonald’s would rather hire one 35 year old black guy who shows up high than 4 teenagers who’d they’d have to actually schedule 🙄. God forbid they hire harder working teenagers who they’d have to schedule
Because business cannot grow their profit forever. They will hit a plateu unless they abandoning moral compass by cheating and lie to extract more money from the existing plateu business. It will always like that then it got worse and then the bubble will burst
Where I am the McDonalds restaurants have all gone downhill in the same way at the same time - orders missing items, ingredients switched out and swapped for unknown replacements, and slower service. Added to which they're no longer so affordable even as a treat. I can see them being a big casualty of the recession as it would only take a small % shift in consumer behaviour to close most of them - and that shift we can see happening around us.
They really didn't need a remodel, they need higher quality employees. I quit going to McDonald's because I was consistently served low quality food by people who didn't want to be there.
If serving high quality food by quality employees was the reason a "fast food" giant succeeded, McDonald's would not exist. Name recognition, product familiarity, catering to children and being the first real brick-and-mortar franchise of any kind are the reason McDonald's succeeded. McDonald's has ALWAYS been last place in food quality, and employed minimum or near-minimum wage (a.k.a. low quality) workers, since that is the only way they can distribute consistency to hundreds of millions of customers worldwide. What they need is what they will soon run out of which is "suckers" who agree to become a McDonald's franchisee. 💁🏻♂️🍔🍟
Higher quality employees and higher quality food equals higher prices. Then you would be saying you don't go to McDonald's anymore because they raised the prices.
@@corybjarnason218 bro, McDonald's raises their prices every single year while never treating their employees better. Companies always raise prices no matter what because they need to keep their current profit margin consistent with annual inflation.
So what kind of people are you expecting to work for minimum wage at McDonald’s. They don’t get 40 hours, they don’t get any benefits. They may not even have a stable schedule. I’d suggest you get a job there and show everybody how it’s done.
If you seen the movie, about McDonald’s, you will see that the corporation stole the McDonalds restaurant business away from the brothers. In my opinion, it’s nothing but absolute greed against the operators.
All companies abuse their operators. From Amazon, FedEx and Uber drivers to McDonald’s. I’d rather invest in stock, or annuities than own and operate any business I didn’t create.
A great overview. To go deeper, you should research the history of McD's ice cream machines that from what I've heard are always breaking and you aren't allowed to fix them; you must go through a specific third party. I forget the details, but that's the very basic gist of it. It's a scam within the scam.
Just adding my 2¢. The McDonald's at 10:55 is currently the last one in downtown Pittsburgh Pennsylvania. On April 30th there will no longer be a McDonald's in downtown Pittsburgh. There four (4) at the end of April 2023 there will be none. So yeah it is getting bad for the operators.
Lol. The first time I learned that McDonald’s is actually in the real estate business was through MattPatt’s Food Theory Channel. Make sense when you scrutinize their financial statements. Food revenue isn’t the top notch highlight. It’s the lease and real estate.
Frankly, McDonalds didn’t need to remodel. Especially at those prices. I think what killed them was 1. the price gouging that started during co veee veee. 2. Keeping customers locked out of restaurants longer than anyone else, and even when they opened again they keep the bathrooms shut. 3. The loss of customer service. Walk in and try not to use a kiosk. You almost have to jump the counter and full body tackle someone to get them to take your order.
Am I the only one that really likes seeing the old timey signs and decor for fast food restaurants? It gives a sense of permanence and they could just refurbish the classic decor instead of replacing it
After you said, "I know what you're thinkin'", I though you were going to follow through with ""Did he fire six shots or only five? Now to tell you the truth, I've forgotten myself in all this excitement. But being this is about McDonalds..."
According to another video: They have partnership with people that fix the ice cream machines don't know about remodels. See video about why McDonalds ice cream machines are always breaking.
Thats the most selfish thing that I've ever read in this video so far. Do you think all the burden will be on the investors? Did you even saw the video ffs
I have to go cross town for my McD, the one next door cheats. Out of 13 orders, 11 come up short or have an UNORDERED item added. This may explain why.
I used to like going to Mcdonalds from time to time, but recently on the last few years their service became very defficient. Negligent, even. Now I understand why. It really is good that now I rarely go to a franchise, and instead go to local restaurants and small franchisees. It os cheaper and way better. It sometimes is faster, even without the Automac.
Yeah I don't like eating at McDonald's anyway. Worst food out of all the fast food chains pretty much in my opinion, slow lines, poor customer service, and they always get your order wrong. And it really is ridiculous how little money you make as an operator considering the initial investment. If you have millions, it is probably in your best interest to invest elsewhere.
Likewise, and here I was all this time thinking these franchise owners must be making endless profits as why else deal with fast food for any other reason? To even attempt to get a McDonald's you have to keep $1M in escrow for one year
There is another factor here that we can ignore, but is huge: a lot of people today are not suited to being a small business owner. And you can tout the McD model all you want, at the end of the day, if you don't have the stones, grit and determination to be a small business manager, you will fail. I have lived in the USA for 54 years and run small businesses. I'm seeing more and more people who phone it in vis a vis managing their place, like they think "it should just run". Nope. They do not "just run". They fall apart constantly, and a small business manager is someone who keeps putting it back together. I'm willing to bet that lack of management acumen and hard work is what is failing a lot of these underperforming locations, as much as other factors that are significant, not dismissing those.
Oh, you’re one of those blame everybody else. Our corporate overlords are never the problem. They never screwup. It’s the franchisees, the workers, the customers.
These types of franchises are basically a version of an MLM . I don't know about McDonald, but there is a Subway in my neighborhood that had so many different owners in the last 15 years , i can't even remember. one owner after another goes bankrupt. The customers don't notice this , because there is always some other sucker that buys the place . So from the outside it seems as if it's a successful business.
What's crazy is that I used to go to McDonald's, WHEN THEY WERE CHEAP, their food was like the hot and ready of the hamburger world, cheap enough to make the shitty burgers edible. I tried going to McDonald's the other day, AND OMG, even with the app, you can't get out of there without spending at least 10 bucks, and the food quality has gone down. There was a time about a year or so ago that I could get out of there under 5 bucks, I would get a hamburger, a small fry, and a large drink, now for that same meal the price has like doubled. Why would I choose them when in and out is right across the street and the food tastes SO MUCH BETTER? The only thing McDonald's has that's better there is the fries, that's it, and they've gotten so expensive not even that is enough to make me shop there.
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What's happening to Subway is probably a good indicator for how things will go for them if they continue to treat thier franchisee like this.
Facts
What happened to Subway?
What Subway is doing to their franchisees is far worse.
@@ZeeengMicro Search john oliver subway here on youtube, you will learn a lot.
@@ZeeengMicro They're a dying business, where no one wants to eat, and many of the restaurants are closing down. They've been closing down around a thousand locations each year since 2018. It doesn't take a great mathematician to understand that they aren't going to exist for much longer at that rate.
An operator or franchisee told me that as soon as the restaurant became profitable...Mcdonalds pushed him really hard to sell the business. They are very smart making you take all the risks and handing out the fruits of the labor on a silver platter.
You think that is bad? In India, they muscled out the Indian franchisee after he had spent around two decades building up the brand from scratch. And it affected nearly two dozen locations
This is common, subway is even worse.
@@Confucius_Says... outrageous!
I stopped eating at McDs when the beef of the QP turned to nasty garbage.
@@mikepekala832 McD's exists for one reason and ONE REASON ONLY, and that is profit maximization for Warren Buffet. Everything the man touches, eventually turns to shit.
If McDonalds disappeared tomorrow without a trace I wouldn't bat an eye
If McD disappeared tomorrow a ton of valuable real estate comes on the market in very desirable locations.
I would celebrate.
There's a rapidly growing list of companies I'd love to see go out of business. McDonald's is on there somewhere.
If McD disappeared tomorrow, the world will be a better place.
Period will.not be missed nasty ass fake food
Let's do some really easy math.
Requirements for McDonald's Franchisees: $500k in liquid assets plus a $45,000 franchise fee. According to their own statistics, gross revenue is about $2.7 million, with net being $150,000 according to Mashed. An annual 30% net profit for that much effort is not terrible, but with long working hours, remodels (which were not accounted for in our little calculation), and external liabilities (vandalism, crime, natural disasters, and really any other freak accident), that's a lot of work and risk of profit loss.
Now, let's invest the 500k into MCD, which has paid a consistently growing dividend for 47 years, and is on track to become a dividend king. Currently it sits at a 2.2% dividend. That's $11,000 for doing absolutely nothing. It can go up and down, and you can effortlessly invest more if you like. But the biggest value is the time you get to do absolutely whatever you want.
Easy math?
Congratulations, you made me feel like an idiot.
You're missing a few things, equipment (350,000 to 700,000), leasing and purchasing of McDonald's real estate (400k-1.8 mil) or signing of a lease (unknown), construction and remodeling if you pick the location (250k-850k), initial inventory (60k-80k), secondary fees (depends on lease agreement, unknown). Depends on if you choose to get a loan from corporate or not but the initial fees can get pretty crazy. But if we take the known elements (equipment, 350k-700k, inventory 60-80k and the initial 500k and 45k requirements you have to pay around 955k- 1 MILLION and 325 thousand dollars. That would be an annual dividend of $21,010-$29,150. Average McDonald's operator controls a store for 20 years. From 2000-2020 average annual return was 11.8% you would gain an additional $112,690-156,350
@@jeez5735 oh yeah, I vastly oversimplified. But when you add those details in, it's even more demonstrable that you're better off just buying the stock than opening a franchise for the same cost. And by cost, I mean in terms of both time and money
$150,000 profit from $2,700,00 sales is absolutely horrible. Anyone who signs up for that or thinks that the work for those sales is worth $150,000 is in need of a math tutor.
@@Lee-ed9wv Yeah. On one hand, turning a net profit at all is a feat in of itself, especially within the first few years of business, and also that in the food industry, with its incredibly thin margins and cutthroat nature of competition. A six figure profit is a pretty solid return, especially in such an unforgiving industry. But the profit to working hour ratio is absolutely horrid, like you said. With lots of franchise owners reporting 80 hour work weeks, around 50 weeks a year, which comes out to about $37.50 an hour. I couldn't find the time period of when those profits emerge, so this could be within the first year, or it could be five years in, in which case there is some survivorship bias.
Granted, this isn't my industry, so I can't speak from firsthand experience, but I can speak with regards to the nature of profit by itself, and the reports put out by current and former franchise owners.
This is not the McDonalds I grew up with of the 1960's. The food quality changed and evidently the relationship to their franchisees. McDonalds are not the only retailer that has gone into real estate for profit. Also the stores are harder to access them from the roads. I noticed that I had to make a lot of left hand turns to get in and out of many of locations. Some of the employees are playing a "pajama game" with the service such as keeping the lids to the drinks half tight causing spills. I noticed that the parking lot of the last one I used to get breakfast while traveling was cratered with drink spills. No more.
😁😁
What place hasn’t changed since the 60s? 😂
Dude I thought it was just me, McDonald's has some of the consistently weirdest entrances, parking lot layouts and drive throughs. If I need to walk in it feels hazardous because I'm always crossing traffic no matter where I park, blind/tight corners or really tight drive lanes--just weird lot planning all around.
Walmart also buys and sells and leases or rents real estate, how many other companies do it I don't know. Many huge corporations run multiple businesses.
About 20 years ago, the McDonald's near my place that's been around for decades lowered their standards. The staff would argue with customers about little things, they would overcharge you on combos meals, they would double charge you with the credit card and in 20 years, I haven't had my orders filled correctly...EVER. There's always at least one thing wrong. When I do order from them, I empty the contents of the bag and open up the burger boxes to see what they did wrong because I know I can't trust them to get it right. I've seen instances where they forget the sauce in their big mac or forget a meat patty. I thought it was all McDonalds but the one 10 minutes away across town doesn't have that problem. It gets my order correct, the staff is not rude, the place is clean.
That's one of the many problems with the franchise model... there's no universal standards for doing business, customer service, quality control. I worked for them years ago, I got fired or laid off for unknown reason so I go to call their franchise owner office and they supposedly don't have records of the event even though I still have pay stubs. Lack of quality control, massive indifference from corporate. Food keeps getting more expensive. I just go to In N Out for fast food or anything else other than McDonalds.
That sounds like a problem that the original McDonald's founders were trying to solve..
You should watch The Founder
I don't get your point?
@@Filthyserb262 he worked for one of Mc Donalds, got to know their shits and never ate from one since then. If grammar is wrong feel free to correct. Thank you in advance.
I got a big mac with no hamburger patties! I have seen many issues but I will never forget my vegan big mac. I never thought I would have to ask where was the beef?
How shocking, the Company that was stolen by scammers, isn't very honest.
7:20 it sounds like McDonald's is more like a pyramid scheme. If their main money makers are the operators and not the people they are selling the burgers to.
More like a Multi Level Marketing company. “Only 10k to sign up to our ‘brand’ and get the starter kit of ugly leggings to sell on Facebook!” McDonald’s is that but as a restaurant
I use to work for McDonald’s back in 2000-2002. The store I worked at when looking at their monthly, quarterly profits… the franchisee was making well over $10-$20 thousand a month per store. Managers were making $6 thousand a month. Their profits were ridiculous so remodeling was an option. Now because of wages and inflation I can understand why they are bailing from this.
Side note burgers like a regular cheese burger would cost 3 cents to make and the cost was 49 cents to the customers. Mind you I’m not adding the shipping, cost to keep the building going and all that jazz.
I’m currently going to school to get a business degree and a management degree to become a owner operator I live in San Diego and starting to see the impact of these franchises I’ve worked with 4 out of the 5 franchises here in San Diego. I have worked along side one of the operator’s for 2 years to eventually seeing the sad reality of him selling there was a store he owned that needed to be remodeled 3 years ago after him eventually selling the McDonald’s finally got a remodel and is now open today. the director of operations always use to tell me we have no money I use to think to my self how but after doing lots of research i now see he was sucked up in the corporate greed and it’s sad that future operators will never have a chance nor something to pass down to there kids I’m 21 and very interested in becoming a owner operator also most these locations are passed down generation to generation which helps with 1m and the 500,000.
Great video there’s a big problem in Cali rn with McDonald jobs the 20$ a hour didn’t help
As a clown from Illinois. Why would you think a corporation from Chicago would be honest ?
Restaurants must be remodeled every 10 years and that means tearing out perfectly good floor tile, seating and dining areas, ceilings and even the restrooms. None of this is payed by McD and the current price for this is $700k to $1m. Doesn’t matter if the decore is in perfect condition it still has to be ripped out and put into the landfill.
it's astonishing how much quality has fallen for the McDonald's restaurants near me. When I was a kid it was a treat to go to McDonald's. I only went into a few different McDonald's in recent years when I was in a hurry/didn't have a choice. To start off they are so dirty I don't even know how it is allowed, there is no way any quality checks are being done, eeven in the outside it looks like a run down building, lights are broken, garbage all over. I got a cold hamburger and french fries that tasted like cardboard. Meanwhile, a Chick Filet opened for the first time in my area a couple years ago, the place is packed all the time. Where I think where McDonald's messed up is they tried to make fast food "healthy", it will NEVER be healthy (it's processed/packaged food that is mass produced). Whereas In-Out-Burger doesn't freeze their burger patties, that is why they cannot open a franchise on the East Coast. If you are going to open a fast food place, do NOT try to offer 'healthy' food options, just go for high fat, great taste (the place will be busy, ESPECIALLY when there are periods of economic downfall, people aren't worried about long term health during those periods, they want simple pleasures that don't cost too much).
The future is McDonald's will operate their own restaurants with robots and cut out the franchisee.
We have been going to McDonalds less and less since too many of the franchises are down right nasty. I called McDonalds corporate and asked for a list of corporate run locations.
Since McDonalds went to the McCafe design we rarely patronize we have Whataburger, Freddy's, 5 Guys, In and Out burger, Dairy Queen. I even gave up on Wendy's and Burger King. There is a shift in the fast food industry or as they want to be called the quick food industry.
Perhaps they’re trying to consolidate their operator pool to a few large, well-financed ones that don’t complain much.
At 2AM we just don't have many options. Atleast some garages have Steers but they far. And I don't wanna risk drinking and driving.
Take a close look at what is in the food before consuming.
8:21 At the beginning of the pandemic the Fed cut interest rates to zero? My friend, the Fed started cutting interest rates back in 2008 and we had been setting at zero percent for years. Only recently, due to inflation, has the Fed started raising interest rates again and that is not a good thing. The Fed is not a good thing.
In 80s, McDonalds had many more restaurants than Burger King in Norway. Today, Burger King har more restaurants than McDonalds in Norway. At olympic at Lillehammer in 94, the sued a old hamburger restaurant who had started in around 1960. It was called McDonald, and McDonalds didnt like it. Problem was for McDonalds this restarurant started long before McDonalds was a wellknown brand. McDonalds lost the case. How stupid this is, shows when i tell u its One restaurant with name McDonald in Lillehammer.....
The model is predatory in nature, heavily skewed in favor of The Corporation, which does better and better the more "wealth" it extracts. The corporation doesn't care, until its "clients" run dry or run out. Even the greatest predator will go extinct if the prey doesn't "offer" enough nourishment, or altogether isn't to be "found" anymore. The biggest dinosaurs of old have disappeared, leaving only meager birds (puny, in comparison). Gone forever are the plant-eaters supported by bones with growth rings like trees - because the lush vegetation they fed on is gone, along with the humid CO2 atmosphere that created that vegetation (and the higher O2 levels it created). Just like dinosaurs, corporations will find life harder and harder, begin to gasp for air and dine on scraps, realizing too late that the good times will not return before they die, or at all. Others will dine on their bone marrow and emaciated corpses. Corporate Corpses..... They're already dead, just don't know it yet.
I try my best to stay away from fast food the service Lacks in many cases and the food quality has went down in many fast food restaurants
Why do McDonald's ice cream machines always break down? Well, same reason: more franchising fees, less profits for the operators
This is why Chick-fil-A is starting to kick McDonald’s behind. They have a better arrangement with their operator partners.
McDonald's has such a small profit margin I remember wondering how they ever make money in the first ten years without over working minimum wage workers and somehow having less waste without running out of food.
Also with cost segregation you can depreciate the building and equipment to reduce income tax
Your video quality is awesome 🔥🔥
Thank you Rollsman! Really trying to take things to the next level!
You can't compare SP500 returns with the cap rate on a restaurant. They both have very different risk profiles.
You can go bankrupt owning McDonalds too.
@@micahjohnsonboxing6409 what? Wether or not you can go bankrupt doesn't mean anything. The stock market has a different risk profile than a restaurant. Some prefer one over the other but you can't just make the two equal because they aren't.
LLC's are common in fast food industry so they're all splitting revenue amongst eachother
The operators are not their biggest customers....
They're just a real estate business
Source: i grew up near McD's corporate headquarters
When you buy into McD, you should already know you're not building up your brand. Also, you're not starting a new company. McD already has a reputation for good or bad. Most restaurants are out of business within 3 years. Most people who buy in already know what they are in for. I know of a few McD that are busy all the time, and when you ask people why did you go to Subway, they say, "There wasn't a line."
I honestly thought the movie, "Super Size Me", would have hurt Mcdonald's more. Apparently, cheap, convenient food trumps health concerns. I don't believe their food is much healthier than it was before. Escaping corporate traps is more challenging than ever. I guess the "lives of quiet desperation" are doomed to continue.
I like Mcdonald's as much as I like fartburgers. I don't!
The food is crap now since the pandemic and way over priced. I eat at Chilis for the same price as a Big Mac meal and i can sit down and enjoy my food. Even Arbys is cheaper now.
As for renovations.. fuq that noise.. .. own the property and pay them for a classic or novelty style location that they can't fuq wit
Why would anyone eat that garbage, let alone sell it for a living?
They could lower franchise costs to 10k like subway
almost $10 for big mac, fries, coke. big mac is noticeably smaller now. no thanks. I'll go to the grocery store.
When you become a customer instead of a business partner, you know you are getting the bad end of the deal.
Facts
Sheeeesh
Maccy's was taken over by investment firms years ago, they just want profit from the name to pay dividends...
Mobility operators
You think ppl feel like a customer for that. Then don't try and run your own business. Small business spend 100% of there so called money on renovations
Also, do not forget that during the remodels, the operator does not have any income from the store. Our local store was down for a year due to remodeling.
Ah very true
@@LogicallyAnswered I recall when my local mcdonalds was remodeled in south africa. In our country we have a sort of construction mafia that wants a cut of all construction work. the store was closed for over a year due to these sort of issues. I know from talking to the owner that it was one of the most profitable ones, but he had to take on massive loans in order to keep the business.
@Ask Grant We actually have the exact same thing in the US, except they all work for various government agencies with redundant jobs, regulations, taxes, and inspections.
@@tedkaczynskiamericanhero3916 very true
I can not fathom why operators would put money into land they do not even own as most people who are craving mcdonalds do not even care what it looks like as long as it appears clean...
McDonald's lost all personality with the remodelling. It went from "a cool place to eat with your family" to "bland corporative food chain you eat sometimes on lunch break"
It was tacky as fuck.
Exactly I worked for them for 12 years after the “remodel “ of ours to resemble Starbucks the quality of the original Mc Donald’s slowly began its decline.
McDonald’s was never a cool place to eat wtf kind of corporate shill nonsense is that. You are a drone who fell for the nostalgia of a corporate brands identity. Wake up, and stop reminiscing about a fucking fast food place.
Maybe it good thing that shutting down so wont eat 🐞 in McDonald burger and fries and soda 🥤
It’s credibility and food that being served to customers people are questioning contents of food that serving that gates is heavily involved in negative aspects pushing to MCDONALD People need to raise up and demand that feed us normal menu of McDonald instead allowing these psychopaths to alter our food at McDonald!!! Power to the People’s 💪
McDonalds is pricing themselves out of the business.
Hey, I have an idea: let's get government to raise the minimum wage! $15/hr ain't good enough, so let's bump it up to $20/hr. What could possibly go wrong?
@@demef758If the only reason your business model succeeds is by keeping its employees in poverty, then your business model doesn’t deserve to exist - at the very least, not in the wealthiest country in human history.
@@demef758 we saw a help wanted sign for $20 an hour in the window of a local Japanese restaraunt.
They still couldn't find help.
They were closed and I don't doubt they close permanently, very soon.
@@demef758
Let’s keep repeating years, old, memes, and keep pretending they’re real.
No, you’re paying for the million dollar remodels. How much do you think that goes in to each burger?
Lies again? Terrible Service
Our way of life is catching up to us. I imagine in another 20 years we wont even recognize our country. Greed is destroying everything.
Exactly. We are set to have a great reset in our lifetime. Im jealous baby boomers never had to experience it. Hopefully sooner than later so I can enjoy my end of life knowing I left a better word behind like ww2 vets.
When I worked at the Los Pollos Hermanos franchise, my boss Gus found a way around these issues.
I enjoyed the after-hours activities and field trips made available at Los Pollos Hermanos.
The Los Pollos Hermanos franchise owners were stand up guys. They donated to the local police and everything!
It must be his new secret recipe.
Gus was such a great guy. Stand up citizen.
I make nowhere near six figures but if I invested 2M into a businuess I would want a lot more than 150k/year... Thats actually a bit absurd.
That’s net profit so assuming you put yourself in the payroll somewhere you would have 150k left over AFTER everything was paid. If you just put the profit in the bank after 10 years you’d have $1.5M.
@@jaymarcase9737 Yeah thats not really worth it when the stock market will give you a higher rate of return than that. Owners had to purchase those TV menu's for around 150k... F that. THe KIosk was also around 150k. Seems like its hard to rely on that rate of return when you have a coorperation that is constantly making you upgrade.
@@user-ec6ej4dp6t the stock market CAN give you a higher rate of return but it is not guaranteed. You have to have enough runway to ride out the downturns.
@Jay Marcase If you have like 5 mill in PepsiCo stock for example, you could literally just live very well off the dividends including a 50% tax on the money.
That's not even doing anything and just collecting, plus your money is pretty safe.
As far as ik 150k is after paying yourself a salary or someone else, if u own many and wwant to be passive investor. idk actual no. i just read it somewhere so correct me if I'm wrong. but 7.5% return isn't that good given risk and work. i would rather just buy some reit or simply real estate and if someone with more risk tolerance stocks
I used to like McDonald's breakfast burritos on Sunday. One Sunday, the drivethru line was very long and the wait longer. I had time to figure in my mind how much it was going to cost. This was before it was more common to use a debit card. When I got to the window the woman told me how much my order was. it was like three bucks more than it should be. Being cash, she was overcharging people and pocketing the difference. When I challenged her on the price she backed off. They were very ghetto and dirty on the inside and outside. Never went back. They only stay in business because of the Interstate exit is a few blocks away.
I prefer real food over addictive trash.
Don't hand them a debit card in drive through ever.. quick snap on their camera phone and you get out of state charges for other people buying stuff
That's crazy. $1-2 million to buy the franchise, $360,000 to remodel, $30,000 technology fee and you STILL need to pay McDonald's monthly rent?!!!!
That doesn't even factor in the mandatory ice cream machine vendor repair fees. 🍔🍟🍦
and you still are leaving out property tax, payroll taxes, income tax, property insurance, workers compensation insurance, hiring the staff, managing the staff, purchasing, maintenance, etc.
@@ObscureManifesto those are normal expenses that ANY business would incur, though. And a franchisee is NOT going to pay property taxes, since they don't own the property.
McDonald's Corporation is the property owner for more than 90% of all McDonald's franchises. This is all in the video. 🎥
@TuNnL incorrect, almost every mcdonalds is triple net. The tenant pays for property tax, insurance, and maintenance.
@@ObscureManifesto not saying you are lying, but generally, landowners pay the property taxes. It is public information that McDonald's owns more than 90% of the land under each McDonald's franchise.
McDonald's Corporation makes the majority of their money buying and selling real estate, which was sort of the point of this video. On the other hand, McDonald's "buys back" the franchise, so that seems to imply the franchisee owns the title to the property.
Definitely one of those "grey areas" worth looking into, but I would be skeptical, because as noted in the video, McDonald's does subsidize the construction costs. Technically, that means they could claim at least partial ownership of the property, and thus responsibility for at least part of the property taxes. 💁🏻♂️💰📜
I would rip them off every turn that presents itself. What's good for the goose is good for the gander. I'm not ur bitch!
I won't shed a tear if McDonald suffered huge losses or went under.
I agree McDonalds treats operators bad, however McDonalds going out of business would be good for humankind so I hope they fail.
The operators unionizing is hilarious to me, and I'm sure the irony of not letting their employees unionize is in fact completely lost on them
I work in healthcare administration. I owe my overpaid bloated salary to loyal fast food customers! Every McDonald's regular is about a quarter million of billable procedures and office visits over their lifetime. Murica
Yeah their fries and nuggets used to be their selling point, but even that are being sold in micro-shops & streets.
So to hell hundreds of thousands of workers, something millions of people love, destroying billions of dollars for the economy every year... Yeah, you're intelligent. Not.
as much as I'm a fan of the free market, I don't disagree with you mate.
I'm not too huge on eating McDonald's. Didn't even know that the franchise system for McDonald's was that bad of a deal.
For real
I don't eat trash.
My body deserves real nutritious food.
Not many ppl think like u my friend salut
@@CordeliaWagner yes
Crazy that the restaurants only earn on average 150k profit per year. That's absolutely insane
McDonalds even left my country. Can't get it anymore. I thought I'd miss it but tbh I don't
Lucky your country is.
In Philippines it's Mc Garbage, terrible quality.
I'm glad someone finally covered this. It has been going on far too long. In Australia, the employees are treated poorly simply becayse the licensees are under massive financial stress. They only staff half as much as they should and who could really blame them? I've seen the contract they enter into and there is no backing out of it. You are forced to run the business for years or see massive losses. Imagine the time wasted just so you don't lose money on your investment, all that time you could spend investing elsewhere if you even have money after.
It's insane, corporate is squeezing everyones throats and people are complaining about the economy: renters, landlords, fed. WHAT ABOUT CORPORATE???
I haven't eaten at a McDonald's since 2019. Horrible service and dirty drove me away from them.
Things I learned working at MdConalds:
1. You need good workers who are willing to work. Replace the bottom half who slack off for good workers if you can, even if you have to pay a bit more.
2. Salt the burgers before pulling them off the grill. It makes them much better
3. Use the bin timer and throw food out when they expire. Fresh food is SO much better, especially for reg meat/quarter meat.
4. Night shift is a lot easier, but customers are NUTS :P
I'm tempted to call it "MdConald's" from now on.
Like, "Mid-Conalds".
So your plan is to get the best of the best workers, but pay the minimum wage. No wait pay them slightly above minimum wage. Most workers don’t stay at McDonald’s. You have constant turnover. Good luck, keeping your golden staff.
Honestly, if mcdonalds wants remodels, they should be one to foot the bill. After all, if business is just fine as is, why should franchisee do it? Besides, they are the landowners anyways. Also, as usual problem is that just some soulless corporate people are grasping at every single trick to achieve infinite growth, well, growth for next quarter so they get bonuses. Usually problem is that when business becomes big, an corporation, they start to use their money, power and financial tricks to make profits instead of making better products. I mean it's much easier to just extract money from someone, use trick to supress/defeat competition, rather than actually competing in fair race.
It just always amazes me how business kind of inherently evil, it can be good, but only if business culture is carefully managed by good leaders and investors, but in the end unless this culture is carefully protected, business either stays small, fails or becomes huge soulless machine that just does whatever for profit as long as they can get away with it.
I'm still upset they got rid of the play places for no good reason
@@CheesyLizzy it's the cost of cleaning the play spaces. That's the reason, and it's good from the operator's point of view, at the detriment to consumers
@@GyroCannon idk man at the McDonald's I worked at we cleaned the play station professionally 1 time a month. Idk the cost but I'd be surprised if it costs that much. Rest of the time we swept it and wiped the tables
@@jeez5735 the operators are being squeezed out every penny by McDonald's corporate. Every bit they save makes a difference.
This is why I always believed mid-sized companies are the best, and this belief always gets reproven time and time again, not small enough to have subpar QC and aesthetics, but not big enough to listen to mostly only investors & shareholders, use consumer engineering, psychological tricks, FOMO, exploit grey areas in laws and contracts, etc.
Over the years I have looked at many franchises. I passed on everything for one reason or the other. McD was the worst franchise agreement. 7-11 had one of the best.
7-11 is like buying yourself job.
@@jaymarcase9737 Yes, but I was talking about the franchise agreements.
7-11 is basically what's called in my country a Sari-sari store(7-11 is a version with a room they can walk-in with AC), and a sari-sari store anyone can start it here no license or local permit nor anything.
Just google "pinas sari sari store"
@@jaymarcase9737 same with Chik fa lay lol
I grew up going to, AND working at, this place. One day about 30 years ago I was at the counter ordering a Hamburger - .79 cents and I requested extra pickles which the gal attempted to charge me .30 cents extra for. I told her to keep it and I would NEVER be back. Fast forward 15 years and a friend bought lunch for us while we were working and, after 15 years of never going back, there it was sitting right in front of me - a Big Mac - which I will admit - I absolutely LOVED them growing up. When I opened the box I was stunned at how much smaller it was then what I remember them being but I quickly ignored that and grabbed the burger with surprising glee - This feeling, however, ended very quickly as soon as I bit into it. Beyond revolting. Unbelievable that they are actually able to label this as "Food". This company has one of THE largest R&D divisions of any company. They literally chemically screw with this "product" in order to give it a weird, almost addictive, quality. In 30 years The only time I EVER would go into one of these places now is to use the toilet. From what I leave behind it isn't too different then what they sell - Theirs just smells....different.
Their places stink like poison.
A lot of food at the grocery store is like that too
@@corvus8638 you are somehow buying groceries wrong
"When I opened the box I was stunned at how much smaller it was then what I remember them being"
Child of the 80's and 90's here. The shrinkflation and reduction in quality are real. With everything.
I agree I was telling my wife how small the burgers are now and The Taste is horrible compared to what they were in the day you want to try another burger that sucks try Burger King they suck bad lately cardboard meat
This is what a franchise is all about. The franchiser carries little risk for huge profits and the franchisee carries most of the risk for little more than wages. Why would anybody get into a franchise?
Because they know how to sell it...
my uncle owns multiple different franchises and he explained it to me like this. When you own a restaurant managing your supply lines, logistics, food quality and branding take up a lot of time and resources. Franchises give you a formula where you know if you do x you get y and a lot of the guesswork and variability is removed from the equation. Managing staff, customer satisfaction and the other dozens of variables in a restaurant takes a savant or a team of people. In a franchise you are paying someone else to manage a substantial portion of the variables that you are not able to or would need to hire people to do for often more than the cost of the franchise fee. But this information is second hand. I have no personal experience, but this is what I was told.
Reminds me of a drug cartel or mafia boss
@@jacsonater You got it right. A friend of mine had a franchise and left it to start a restaurant on his own. He said he traded one headache for another.
He's happier now though, makes a better profit and retains staff for years as he can pay more and give little perks to the staff as well.
He also works 8 - 10 hours more a week on supply and delivery etc.
because most of these folks inherited their money and are dumb as rocks. So they buy a money generation machine. All you need to open a restaurant or bar are Good staff , an appealing idea and intelligence. Most of these folks resent paying the serfs at all and believe the world owes them
I knew someone who sold off his franchise, and I stopped eating there after hearing the stories about his relationship with the corporate offices. Turning your business partner into a customer isn't something I would recommend doing.
they let the meat sit too long, and now theyre charging triple the price for it
f that
This was super interesting. I was looking at investing in McDonald's as a long term dividend hold, and this is the sort of thing that just would not come up in my investment analysis.
I have not been back to McDonalds since the pandemic. Our home-cooked meals are now nearly 100%.
We went to a dine-in lunch for two at McDonald's just prior to the health crisis. Half the place was under construction. The other half was crowded with loud and unruly people. Two burgers, fries and drinks were about $25. That was my last trip there. Two great burgers and fries (no drinks) at In-n-Out cost us $9.79.
McDonald's in the 70s was as good as In and Out, almost.Burger fries drink
99 cents 1973
Why not eat real food?
Forgetting that McDonald's is garbage food, there is a reason In-and-Out is so cheap.
It's great to hear operators are pushing back. Personally I think McDonald's collapsing would be a great thing. It would at least get them to re-evaluate their behaviour
I discovered the miracle of air fryers. I dont need McDonald's anymore.
Worked at a Mcds during all those remodels. Which was a nightmare also. The state had 3 contractors that worked with Mcds, with all the remodels they needed more, so the store I was at got a new contractor and it was just problem after problem. Some of which was just a bad job. No conduit was ran in a wall that was already tiled for the front registers. Tables were put in after tile on the floor was done, but drilling out the concrete putting the table in and filling it with concrete. No problem...until they slopped the cement to set the post on the finished tiles and didn't clean it up and let it dry... Guess there something like 70 problems and the finish walkthrough.
🤯🤯🤯🤯 wowwww
It's time for McD's and all companies like it to fail and go away.
You're obsessed with them
I just went to a local McDonald’s last night. A fish sandwich meal with medium fries and a strawberry shake, plus a two-cheeseburger meal with medium fries and a coke - $21 and some change.
I’ll be helping that location go bankrupt by never going back. The food quality is terrible at McDonald’s so no way I keep spending that kind of money on their food.
You just told that you are lazy and JunkFood addicted.
Same boat here. Spent over 20 on 4 breakfast sandwiches back in December. Haven’t been back since and never will again.
I was thinking the difference between Mc Donald's and a pyramid scheme are minimal.
- You get franchisees because they want to be "independent entrepreneurs"
- The business opportunity in not so shiny as presented
- Larger part of profits is made of internal purchases rather than external ones
- Only a little percentage of employees and operators earn reasonable salaries and returns on investments
- The "core" of the company is disinterested on how the employees fare.
- You have required corporate expenses to cover with your own revenues.
I was thinking about MLMs too!
yoi you are right
Anyone catch the irony that the operators tried to for what is essentially a union?
I have been surprised it lasted this long.
Mcdonalds are so different from location to location. Some locations are fast and friendly and others are rude and slow. I also noticed that the good employees jump around to other locations. I also know some nice young people who applied to work at a location and got an interview and never heard back. Meanwhile that same location has major issues and is slow. Mcdonalds is going to fail if they don't get all of their store up to standard.
I rather eat real food than going there.
These places stink poisonous.
McDonald’s would rather hire one 35 year old black guy who shows up high than 4 teenagers who’d they’d have to actually schedule 🙄. God forbid they hire harder working teenagers who they’d have to schedule
Yup that is how it is around me as well out of the dozen or so close by only two of them are any good to visit.
that’s hilarious. they make billions but offload expenses to their franchise’s
Because business cannot grow their profit forever. They will hit a plateu unless they abandoning moral compass by cheating and lie to extract more money from the existing plateu business. It will always like that then it got worse and then the bubble will burst
Where I am the McDonalds restaurants have all gone downhill in the same way at the same time - orders missing items, ingredients switched out and swapped for unknown replacements, and slower service. Added to which they're no longer so affordable even as a treat. I can see them being a big casualty of the recession as it would only take a small % shift in consumer behaviour to close most of them - and that shift we can see happening around us.
They really didn't need a remodel, they need higher quality employees. I quit going to McDonald's because I was consistently served low quality food by people who didn't want to be there.
If serving high quality food by quality employees was the reason a "fast food" giant succeeded, McDonald's would not exist. Name recognition, product familiarity, catering to children and being the first real brick-and-mortar franchise of any kind are the reason McDonald's succeeded.
McDonald's has ALWAYS been last place in food quality, and employed minimum or near-minimum wage (a.k.a. low quality) workers, since that is the only way they can distribute consistency to hundreds of millions of customers worldwide. What they need is what they will soon run out of which is "suckers" who agree to become a McDonald's franchisee. 💁🏻♂️🍔🍟
Higher quality employees and higher quality food equals higher prices. Then you would be saying you don't go to McDonald's anymore because they raised the prices.
@@corybjarnason218 They raised the prices too high regardless. It's close to $20 for a combo meal now.
@@corybjarnason218 bro, McDonald's raises their prices every single year while never treating their employees better. Companies always raise prices no matter what because they need to keep their current profit margin consistent with annual inflation.
So what kind of people are you expecting to work for minimum wage at McDonald’s. They don’t get 40 hours, they don’t get any benefits. They may not even have a stable schedule.
I’d suggest you get a job there and show everybody how it’s done.
With the looming commercial real estate crisis soon approaching, it makes sense why today's news about McDonald's layoffs came out today.
0:21 please add a seizure warning that was intense
If you seen the movie, about McDonald’s, you will see that the corporation stole the McDonalds restaurant business away from the brothers. In my opinion, it’s nothing but absolute greed against the operators.
All companies abuse their operators. From Amazon, FedEx and Uber drivers to McDonald’s. I’d rather invest in stock, or annuities than own and operate any business I didn’t create.
Those other companies don't have franchises, so I'm not sure what you consider an operator.
A great overview. To go deeper, you should research the history of McD's ice cream machines that from what I've heard are always breaking and you aren't allowed to fix them; you must go through a specific third party. I forget the details, but that's the very basic gist of it. It's a scam within the scam.
McDonald's is a real-estate co. Not a restaurant chain.
Just adding my 2¢. The McDonald's at 10:55 is currently the last one in downtown Pittsburgh Pennsylvania. On April 30th there will no longer be a McDonald's in downtown Pittsburgh. There four (4) at the end of April 2023 there will be none. So yeah it is getting bad for the operators.
Lol. The first time I learned that McDonald’s is actually in the real estate business was through MattPatt’s Food Theory Channel. Make sense when you scrutinize their financial statements. Food revenue isn’t the top notch highlight. It’s the lease and real estate.
That guy promotes addictive JunkFood like noone else.
Ray Crock realized this early on.
Frankly, McDonalds didn’t need to remodel. Especially at those prices. I think what killed them was
1. the price gouging that started during co veee veee.
2. Keeping customers locked out of restaurants longer than anyone else, and even when they opened again they keep the bathrooms shut.
3. The loss of customer service. Walk in and try not to use a kiosk. You almost have to jump the counter and full body tackle someone to get them to take your order.
Am I the only one that really likes seeing the old timey signs and decor for fast food restaurants? It gives a sense of permanence and they could just refurbish the classic decor instead of replacing it
Sure, if you feel nostalgic for the start of the obesity epidemic.
I do like old retro signs though.
Their food prices are crazy
After you said, "I know what you're thinkin'", I though you were going to follow through with ""Did he fire six shots or only five? Now to tell you the truth, I've forgotten myself in all this excitement. But being this is about McDonalds..."
Imagine thinking McDonalds didn’t get kickbacks from the companies doing the remodels
According to another video: They have partnership with people that fix the ice cream machines don't know about remodels. See video about why McDonalds ice cream machines are always breaking.
I knew it was over when they started making you pull around after ordering from the drive-thru.
And in just a week we have the McDonalds layoffs starting.
Nothing more than real estate investors hiding behind the facade of a burger joint ?😮
When I was a kid a McDonalds franchise was a goldmine, now it seems like an empty shaft.
I hate McDonald's I hope they all go out of business
Thats the most selfish thing that I've ever read in this video so far. Do you think all the burden will be on the investors? Did you even saw the video ffs
@@Psychopatz McDonald is trash 🗑
I have to go cross town for my McD, the one next door cheats. Out of 13 orders, 11 come up short or have an UNORDERED item added. This may explain why.
15 an hour tho.
I have one near me that does the same. For me the signs of a "trap" McDonalds are: 1) Never that busy 2) Open 24 hours
I used to like going to Mcdonalds from time to time, but recently on the last few years their service became very defficient. Negligent, even. Now I understand why. It really is good that now I rarely go to a franchise, and instead go to local restaurants and small franchisees. It os cheaper and way better. It sometimes is faster, even without the Automac.
Yeah I don't like eating at McDonald's anyway. Worst food out of all the fast food chains pretty much in my opinion, slow lines, poor customer service, and they always get your order wrong. And it really is ridiculous how little money you make as an operator considering the initial investment. If you have millions, it is probably in your best interest to invest elsewhere.
Wow, I see how the franchising system is less appealing each time I learn more about it 😮
Likewise, and here I was all this time thinking these franchise owners must be making endless profits as why else deal with fast food for any other reason? To even attempt to get a McDonald's you have to keep $1M in escrow for one year
There is another factor here that we can ignore, but is huge: a lot of people today are not suited to being a small business owner. And you can tout the McD model all you want, at the end of the day, if you don't have the stones, grit and determination to be a small business manager, you will fail. I have lived in the USA for 54 years and run small businesses. I'm seeing more and more people who phone it in vis a vis managing their place, like they think "it should just run". Nope. They do not "just run". They fall apart constantly, and a small business manager is someone who keeps putting it back together. I'm willing to bet that lack of management acumen and hard work is what is failing a lot of these underperforming locations, as much as other factors that are significant, not dismissing those.
Oh, you’re one of those blame everybody else. Our corporate overlords are never the problem. They never screwup.
It’s the franchisees, the workers, the customers.
I guess this is why a Big Breakfast with Hot Cakes and a Large Coffee is now $25.00
These types of franchises are basically a version of an MLM . I don't know about McDonald, but there is a Subway in my neighborhood that had so many different owners in the last 15 years , i can't even remember. one owner after another goes bankrupt. The customers don't notice this , because there is always some other sucker that buys the place . So from the outside it seems as if it's a successful business.
What's crazy is that I used to go to McDonald's, WHEN THEY WERE CHEAP, their food was like the hot and ready of the hamburger world, cheap enough to make the shitty burgers edible. I tried going to McDonald's the other day, AND OMG, even with the app, you can't get out of there without spending at least 10 bucks, and the food quality has gone down. There was a time about a year or so ago that I could get out of there under 5 bucks, I would get a hamburger, a small fry, and a large drink, now for that same meal the price has like doubled. Why would I choose them when in and out is right across the street and the food tastes SO MUCH BETTER? The only thing McDonald's has that's better there is the fries, that's it, and they've gotten so expensive not even that is enough to make me shop there.