Is McDonald’s a Real Estate Company? How It Makes Money
In a way, yes. McDonald’s sells burgers, but a big part of its money comes from rent. The company owns the land or the building under most of its restaurants, and the local owners who run them pay it rent every month. That is why people often call it a real estate company that happens to sell food.
How does the real estate side work?
About 95% of the roughly 45,000 restaurants around the world are run by franchisees, who are local business owners. The company does not just sell them the right to use its name. It usually picks the spot, buys the land or signs a long lease, and puts up the building. Then it rents that site to the franchisee.
The franchisee pays rent plus a fee based on sales. Rent is often tied to sales too, so when a restaurant does well, the company earns more.
How much property does it own?
| What | Share owned |
|---|---|
| Restaurant buildings | About 80% |
| Land under restaurants | About 56% |
| Yearly rent from franchisees | About $10 billion |
Some experts think all that property could be worth around $120 billion.
Where did this idea come from?
In the 1950s, Ray Kroc was growing the chain but making very little from each franchise. His finance chief, Harry Sonneborn, came up with a plan: set up a company to buy or lease the land and then rent it to the owners. That gave the business steady income and more control, because an owner who breaks the rules can lose the lease. Sonneborn is known for saying the company was really in the real estate business, not the food business.
Want the full early story? Read who founded McDonald’s.
So is it a food company or a real estate company?
It is both. Customers see a burger chain. Investors see a company that collects rent from thousands of prime corners, often near busy roads. The food brings people in, and the rent keeps money coming even when sales slow down.
Does this change what you pay?
A little. Franchisees pay rent and fees, so they set their own prices to cover costs. That is one reason a Big Mac can cost about $5.91 in one town and more in another. Read more in why restaurant prices vary by location, and see typical prices on our McDonald’s menu.
Frequently asked questions
Is McDonald’s really a real estate company?
It sells food, but a large share of its income is rent from franchisees, so many people describe it as a real estate business too.
How much land does McDonald’s own?
It owns about 56% of the land and about 80% of the buildings where its restaurants sit.
How much rent does McDonald’s collect?
About $10 billion a year from franchisees around the world.
Who came up with the real estate plan?
Harry Sonneborn, an early finance chief who worked with Ray Kroc in the 1950s.
Do franchisees own their restaurants?
They own and run the business, but in most cases they rent the land or building from the company.
Prices are typical U.S. prices before tax and can vary by location. Menus Info is not affiliated with any restaurant mentioned. See how we check prices.
