-85% of McDonalds restaurants are franchises. This means that they are locally owned small businesses.
- It costs the business owner between $685,750 - $1,504,000 to open a new McDonalds location.0
- Only 60% of the startup can be borrowed. The rest has to come from the owner's personal capital.
- The average McDonalds brings in 2 million per year in revenue (this is the average of all McDonalds including corporate stores and franchises)
- The net profit averages 6-8%
7 percent of 2 million is $140,000 (before taxes). If it costs an average of 1 million to open a McDonalds, then the projected ROI (return on investment) is 14% (140000/1,000,000). Hardly a huge return, especially considering the risk you take in opening a new business- one that has to compete not only with every other fast food restaurant, but also with every other local McDonalds. After taxes, that 140,000 becomes 92,400 assuming top bracket. This is a very modest income for a business owner.
Given these numbers, how can you state that there is "more than enough room in the business model to raise the wages?" The last link at the bottom shows an actual P&L from a $2.7 million dollar McDonalds location.
Here are my sources:
Google: How much does it cost to open a McDonalds?
McDonald's Dividend Depends On How Well Its Franchisees Do - McDonald's Corporation (NYSE:MCD) | Seeking Alpha
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