When you see the famous ‘M,’ the golden arches, of McDonald’s, you know exactly what’s in store. You can practically smell the food in your car already. Their highly recognizable brand voice is no accident either—it’s a sound system that helps McDonald’s pop into your mind when you get hungry. This type of high-profile notoriety combines marketing and real estate tactics that get results—i.e., those chicken nuggets you finished on the way home.
Former McDonald’s CFO Harry J. Sonneborn was quoted saying, “We are not technically in the food business. We are in the real estate business. The only reason we sell fifteen-cent hamburgers is because they are the greatest producer of revenue, from which our tenants can pay us our rent.” While this downplays the deliciousness of the Big Mac you’re now thinking about, the strategic company approach to real estate has resulted in that Mac-sauce magic. If they were to own enough establishments in key places, they could make their company memorable—and that’s exactly what transpired.
The combination of their recognizable logo and real estate strategy was, needless to say, incredibly effective. The multi-faceted approach works harmoniously to ensure you see that M almost everywhere you go. If you’re hungry while you’re out and about, McDonald’s is going to be one of the culinary options on your mind.
Of course, this is commonly known as franchising. Fast food chains have used this method of expanding to make a meaningful impact on the food industry as a whole. Still, where other fast food companies went with the traditional system of selling supplies to franchisees or demanding exorbitant royalties, the McDonald’s Corporation chose to become their landlord instead.
McDonald’s bought the properties for its franchises and then leased them out at a profitable margin. On top of that, the corporation took a percentage of each location’s gross sales. The model has proven to work—and now there are McDonald’s locations almost everywhere you look.
McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 36,000 locations worldwide. Of those establishments, a meager 15% are actually owned and operated by the McDonald’s corporation directly. Every other restaurant is franchisee-operated, fueling the marketing engine that’s taken the corporation to the top of the fast food ‘chain.’
Nowadays, McDonald’s is a marketing mogul with $40 billion worth of real estate assets before depreciation and $9 billion in revenue, $4 billion of which is profit. Their dedication to diversification has served them well, in addition to exciting marketing tactics like McDonald’s menu specials. As other companies take note of and implement the model, it continues to garner traction and attest to the efficacy of diversification and creative marketing overall. No one is a stranger to McDonalds.
So, next time you’re thinking about swinging through the drive-thru to satiate that chicken nugget craving, just know you’re not alone—you’re enjoying a product that was placed in front of you intentionally. No matter where you are, there’s always something sweet or salty for a mid-day pick-me-up, morning comfort, or late-night drive.
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