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McDonald's Real Estate: How They Really Make Their Money (2015)

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Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#81
post #60
post #54

Earlier quoted context omitted.

Asshole ? Why? What harm or pain did Ed cause to anyone by throwing the food away?

Seems disrespectful to poor, starving people.

With this kind of logic, flushing your toilet is disrespectful to people in Africa with limited access to drinkable water.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#82
post #20

It was an eye-opener for me when I was a teen and bought a gallon of soft drink syrup from a McDonald's for use at a party. It worked out to about 5 cents a cup for the drink in a soft drink, which sold for 75 cents (if I remember correctly). McDonald's doesn't make money selling burgers, they make money selling the soft drinks and the fries. The same goes for any restaurant, it's why they ply you for drinks.

Look at movie theaters. They make all their money to a first approximation from popcorn and soda. The movie is just the loss leader that gets people in the door. It's also where the now much-mocked "super sizing" comes from. They can up the revenue per meal while upping the cost by almost nothing.

> Look at movie theaters.

I don't think it was like that in the beginning. Running a cinema (movie theater) was a normal business until Hollywood milked it to the extreme. They created their own chains of multiplexes in many countries to push their idea of how the business should work.

These days modern cinemas are built like tourist traps with customers having to either walk through/past chain restaurants or having to find some weird side door to enter directly. It's quite a difference to even the 80s or 90s when cinemas had impressive/glamorous lobbies.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#83

Sure, but the burgers are a critical component of the whole picture. It's almost like saying that grocery stores are not really in the grocery business, they are in the business of accepting cash and credit card payments. True, that's where they "make their money", but that business would dry up pretty quick if they didn't stock groceries.

Yes, it's how they "really" make their money in the sense of how precisely the money goes from franchise owners to them, rather than anything surprising about how the money is made.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#84

McDonald's business model of renting premises to their franchisees sounds similar to the way many pubs are operated in the UK. Breweries (and "PubCo's") typically own the premises, which is leased to a tenant (publican) who is required to purchase the brewery's products. https://en.wikipedia.org/wiki/Tied_house

In a pub setting the pub owner is free to select food and furtineture and such. Breweries will assist, but there's a lot of freedom. In franchise you have to stick to the branding and menu offers and in practice you have to follow the prices (legally they can't force independent franchise companies to sell a burger for the same price, but there are ways) giving very little freedom.

There is no freedom in a UK pub franchise that will help you, because if you do well they will screw you the month after on tied beer prices.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#85
post #57
post #20

Earlier quoted context omitted.

Look at movie theaters. They make all their money to a first approximation from popcorn and soda. The movie is just the loss leader that gets people in the door. It's also where the now much-mocked "super sizing" comes from. They can up the revenue per meal while upping the cost by almost nothing.

I'd agree if you are talking about the 'movie industry' - While yes, what you describe is true - part of this has to do with the film rights pricing which is mandated by the studios/distributors, so even if a theater wanted to structure things differently, they could not.. Of course many of the major theatre chains are also related to the studios, so it gets a bit hard to see which end is up.. but I digress

>Of course many of the major theatre chains are also related to the studios, so it gets a bit hard to see which end is up.

As far as I can tell, not in the US. Open Road Films is a joint venture of AMC and Regal, but Open Road only has about 1% of the film market. National Amusements has a controlling interest in Viacom, which owns Paramount Pictures, but National Amusements only has about 1% of North American movie theaters. None of the big US studios own any of the big 3 US theater chains.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#86
post #12
post #10

Well now I'm pretty curious, how does McDonald's operate all of their distribution channels with the whole franchise/renting model? Most of the Micky D's I've seen have tons of freezer food that they put through various machines to make all of the food items quickly. I can't imagine they let owners get their primary products from anything other than a distribution center. Do the owners need to buy those products sepa…

The owner/operators purchase from approved vendors; I've been out of the game for awhile, but we bought everything through two distributors; bread products from an approved vendor, and everything else from a second vendor.

It is all through one distribution vendor with regards to product now. Only plant(equipment) purchases are outside of the primary distributor now.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#87
post #40

Earlier quoted context omitted.

I remember at that age understanding that ads are not truthful at a deep level and filtering them. I find it's much harder for me now. Everything seems like an ad now a days and I may not believe the message but having the money to pay for so many ads on expensive platforms gives me a different message. If a company can afford a superbowl ad it gives me the impression the product has resources behind it and I can ass…

You're talking about the demographic who believes in Santa Claus, right?

In a Country that largely believes virgin birth and one very specific zombie.

One crazy belief is not sign of universal insanity. Perhaps though it is a sign of susceptibility, which is what we seem to be talking about.

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#88
An important point about owning the franchise real estate: a rental agreement is far stronger for the landowner than a franchise agreement is for a franchiser. The McDonald's franchise agreement specifies the address the franchise must be located. In effect, McDonald's can cancel a franchise agreement by ending the rental agreement. This gives them enormous power to enforce company-wide standards on cleanliness and mandate suppliers. Other chains (eg: Burger King) do not own the majority of their franchise properties and have had more significant problems with enforcing franchise standards.

Source: McDonald's: Behind The Arches, John F. Love (July 1, 1995)

Edit: changed ie to eg, thanks for the correction all

Re: McDonald's Real Estate: How They Really Make Their Money (2015)

#90
post #60

Earlier quoted context omitted.

Seems disrespectful to poor, starving people.

1. 40% of food in the U.S. is discarded. https://www.nrdc.org/sites/default/files/wasted-food-IP.pdf 2. Much food is never harvested. A large portion of it is also never taken to market due to blemishes. http://californiawatch.org/health-and-welfare/food-waste-rem... 3. Supermarkets discard about 1/3 of their food due to spoilage, blemishes, and overripeness. http://www.npr.org/sections/thesalt/2014/09/25/351495274/s…

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