Q:

What is a McDonald's franchise's profit?

A:

An average McDonald's franchise makes between $500,000 and $1 million in profits per year as of 2013, according to McDonald's Franchise Disclosure Document. For restaurants open at least 1 year in the United States, average total revenues are $2.6 million.

As of 2013, the U.S. restaurant franchise with the highest sales is Chick-fil-A. Its restaurants average gross revenues of $3.1 million per year. McDonald's is second with $2.6 million in annual single-store sales. Jason's Deli comes in third with an average of $2.55 million in sales per store. Subway has more locations than McDonald's, but stores earn an average of only $481,000 in revenue each year.

Profit margins are typically low for restaurants in general and especially for restaurants owned by individual franchisees. The average profit margin for the restaurant industry overall is 2.4 percent, as of 2013. The margin is down from 3.2 percent in 2009. The average franchised restaurant location makes a profit of less than $50,000 per year as of 2013. Opening a franchised restaurant with an established brand sometimes costs as much as $500,000.

McDonald's is the largest restaurant chain in the United States as of 2013 and is highly profitable on a corporate level. The company earned revenues of more than $27 billion and profits of $5.5 billion in 2012, with a profit margin of almost 20 percent. The profit margin for large U.S. companies averages about 8.7 percent.


Is this answer helpful?

Similar Questions

  • Q:

    How is a franchise formed?

    A:

    Forming a franchise involves developing a business system, creating an operations manual, drafting a franchise agreement and making a marketing plan. The goals are to make the new location independent and to train the franchisee to run it on his own. Creating a franchise takes time, money and legal support.

    Full Answer >
    Filed Under:
  • Q:

    What are the advantages and disadvantages of multinational companies?

    A:

    Multinational companies allow operators to expand operations and derive profits from multiple countries. MNCs also bring jobs and access to products and services to countries of operation. However, MNCs are more complex to operate, and they face criticism for profit-centric motives and cultural influence.

    Full Answer >
    Filed Under:
  • Q:

    Why is Burger Chef closed?

    A:

    According to the individual who created the company's forecasting model, Burger Chef closed because the split of profits between franchise owners and General Foods, which owned the company, was too disproportionate for the latter to be able to sustain the business.

    Full Answer >
    Filed Under:
  • Q:

    What is a profit sharing plan?

    A:

    A profit sharing plan gives employees a percentage of the profits the company earns each year. These funds are put into an investment account for the employees.

    Full Answer >
    Filed Under:

Explore