No matter what town you find yourself in, it almost feels like there's a McDonald's somewhere nearby. While there are places without one left, that might change in a decade or two. McDonald's has increased its total number of locations every year for the past 17 years. According to data collected on Statista, in 2022, it was operating 244 more restaurants than it was in 2021. In other words, there was an average of 20 new McDonald's locations every month.
A caveat: Just because McDonald's opened more restaurants than it closed doesn't mean it didn't close any. During the pandemic, the fast food chain closed hundreds of its Walmart locations, for example. However, it seemed to open even more elsewhere.
So, how did McDonald's manage to expand to 40,275 locations? They focused their efforts on franchising. Approximately 95% of its locations are leased and operated by independent partners. In exchange for an initial fee, pricey rent, and royalties, McDonald's franchise owners can make serious money. Still, the McDonald's corporation makes even more.
Opening New Locations Makes McDonald's Money — But Not The Way You Think
Keeping tens of thousands of locations running is the key to McDonald's business strategy. However, it's not just because of food -- it's because of property. McDonald's first CEO, Harry Sonneborn, discussed this further in "Fast Food Nation," written by Eric Schlosser. "We are not basically in the food business," Sonneborn said. "We are in the real estate business."
He also discussed why some items are priced so low. "The only reason we sell [$0.15] hamburgers is because they are the greatest producer of revenue from which our tenants can pay us our rent," Sonneborn said.
While McDonald's isn't selling burgers for $0.15 anymore, it is still making money from real estate. That philosophy has remained true. McDonald's owns most of its locations -- 80% of the buildings, according to Workweek.
To operate them, franchisees have to pay rent. Lots of rent -- enough to make up 36% of the company's revenue in 2021. This is more proof that it costs serious money to own a chain franchise.
Franchisees also pay McDonald's for the privilege of selling its recipes. All of that makes McDonald's franchises incredibly profitable: The company made $13.1 billion in profit from its franchises in 2021 alone.
McDonald's Is Opening Locations Around The World
McDonald's is still expanding. "Overall, we anticipate over 4% unit growth from about 1,500 net restaurant additions in 2023," CFO Ian Borden told investors via Yahoo. That would mean more than four new locations a day.
"The growth in the U.S. is still going to be rather nominal," BTIG Managing Director Peter Saleh told Yahoo. He anticipates a net gain of 20 locations in the States. The rest of the world is where the real growth is: McDonald's plans to open 900 new locations in China alone.
McDonald's restaurants are on almost every continent except for Antarctica -- complete with tasty regional McDonald's menu items. That said, there are countries where it's illegal, unsafe, or prohibitively expensive for the chain to operate.
For example, Bermuda doesn't allow any foreign fast-food chains. McDonald's withdrew from Russia in 2022 after the Russian military invaded Ukraine. And in 2008, the global financial crisis killed the chain's presence in Iceland. Still, the fast food giant manages to operate in over 100 countries around the world.
Read the original article on Daily Meal.