McDonald's Makes Its Billions on Rent, Not Burgers

In 2025, McDonald’s collected $10,442 million of rent from its franchisees, $6,018 million of royalties and $88 million of initial fees¹. Its own restaurants sold $9,690 million of food, and its total revenue was $26,885 million¹.

Rent is the biggest single line. Of every $100 of McDonald’s revenue, about $39 was rent, $36 came from sales at its own restaurants, $22 from royalties and $3 from fees and other revenue². Rent was $1.74 for every $1 of royalties, and it was larger than the sales of every restaurant McDonald’s runs itself².

The burgers it sells itself

McDonald’s runs only 2,039 of its 45,356 restaurants, about 1 in 22^3,4. At those, every $100 at the counter goes like this: $31 on food and paper, $30 on crew pay and benefits and $24 on the building and other running costs, leaving about $15 of restaurant margin⁵. That is before the company’s own overhead⁵.

The rent it collects

Franchisees run the other 43,317 restaurants³. Of every $100 they paid McDonald’s in 2025, about $16 covered the costs of their sites and about $84 was margin⁶. Franchised margins were $13,930 million, against $1,422 million at the company’s own restaurants⁷. McDonald’s says franchising was about 90% of its restaurant margin dollars⁷.

The deal is set out in the annual report. Under a conventional franchise, McDonald’s generally owns or holds a long-term lease on the land and the building, and the franchisee pays for the equipment, signs, seating and decor⁸. Franchisees pay rent and royalties as a percent of sales, with a minimum rent, and agreements generally run 20 years⁸.

So McDonald’s is paid on sales, not on profit. In 2025, rent came to about $11 of every $100 a conventional franchisee sold, and royalties to about $4.64 of every $100 of franchised sales⁹. The company describes its revenue as “largely a function of franchisee sales”¹⁰.

On new U.S. restaurants, rent starts at 10% of sales and can reach 15.75% where McDonald’s spent more on the site; restaurants built before 2020 generally start at 8.5%¹¹. From January 2024, the royalty for new franchisees rose from 4% to 5% of sales¹¹.

What a typical restaurant pays

A typical U.S. franchised restaurant open at least a year sold about $4,057,000 in 2025, according to a summary of the company’s franchise disclosure document¹². At the system-wide rent ratio, that would mean roughly $450,000 of rent a year, plus $162,000 to $203,000 of royalties; this is an estimate, and the actual rent varies by site¹³.

How the landlord was built

Ray Kroc opened his first McDonald’s in Des Plaines, Illinois, on April 15, 1955, and took in $366.12 on the first day¹⁴. His contract with the McDonald brothers gave him 1.9% of each restaurant’s sales, of which 0.5% went to the brothers¹⁵. That left him $1.40 of every $100 sold, before paying for training and field consultants¹⁶.

The fix was property. Franchise Realty Corporation, formed in 1957, bought or leased sites and leased the buildings to franchisees at a 40% markup, with percentage rent of 5% of sales above a base¹⁷.

The landlord today

At the end of 2025, McDonald’s land and buildings had cost $45,877 million, out of $49,290 million of property at cost¹⁸. It owned about 56% of the land and 80% of the buildings for restaurants in its consolidated markets¹⁹.

Franchisees have already signed up to pay $31,451 million of minimum rent, $3,045 million of it in 2026²⁰.

The model is very profitable. Operating income was $12,393 million in 2025, 46.1% of revenue, and the company returned about $7.1 billion to shareholders²¹.

This autumn: the landlord cuts the rent

The tenants are under pressure. In the second quarter of 2026, U.S. comparable sales rose 0.8% on bigger checks, but McDonald’s reported negative guest counts²². Placer.ai estimates U.S. visits fell 4.5%, against 3.0% for fast food as a whole²³. McDonald’s says it cannot verify third-party data²³. Fortune reports that the shares are 32% below their February high and that the under-$3 menu did not draw enough customers²⁴.

On September 23, McDonald’s said it plans about $8.5 billion of support for franchisees through 2036, through a combination of rent relief and capital support²⁵. The company also said traffic in its key markets would likely stay flat while inflation stayed high²⁶.

The fight over prices

Franchisees set their own menu prices. Reuters reported on September 29 that McDonald’s pricing engine recommends prices to nearly 14,000 U.S. restaurants, and that five franchise owners said they had faced pressure to follow it²⁷. At two company-run stores in Fresno, two miles apart, Reuters found a Big Mac at $5.69 and $6.89; it could not confirm whether the engine caused the gap²⁷.

On October 2, a proposed class action was filed in federal court in Illinois claiming the tool amounts to price-fixing²⁸. It is a claim, and nothing has been proven. McDonald’s said “We don’t have any way to affect the menu pricing in a restaurant”²⁹, and that “AI does not set menu prices at McDonald’s restaurants. McDonald’s franchisees do”²⁸.

What it shows

A landlord paid on sales wants more sales, while the tenant also has to pay for the food and the crew. When customers stay away, that difference shows up as rent relief, a pricing tool and a lawsuit.

McDonald’s third-quarter results are expected in early November, on dates the company had not confirmed by October 25³⁰. Rent, royalties and guest counts are the lines that tell the story.