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McDonald’s Corporation: A real estate empire financed by french fries

By all appearances, McDonald’s is a world famous hamburgers and fries joint. Encased within this business model, however, lies a brilliant real estate framework of long-term financing and variable operating agreements. The soul of McDonald’s is its 36,000 properties, paid for with fries. Ray Kroc, the founder of McDonald’s, once asked a group of MBA students to tell him what business they thought he was in. The hamburger business of course, they told him. No, he replied, “My business is real estate.” McDonald’s enjoyed sales of over $25 billion last year (equivalent to just under 16 billion double cheeseburgers), and the company owns of some of the most valuable real estate across the globe. It is paid for with rent generated from the sale of its iconic burgers and fries, and in this regard, McDonald’s business model resembles a 36,000 unit apartment complex. More

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