The Secret Way McDonald's Makes Money


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Everyone thinks McDonald’s is in the hamburger business. But they have a secret business model that not everyone knows about.
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The Secret Way McDonald’s Makes Money
0:10 – What’s McDonald’s biggest money maker
1:00 – The truth is MCDonald’s is a real estate business
1:39 – Why McDonald’s shifted from the burger business to the real estate business
2:41 – Opening a McDonald’s franchise
3:20 – Diagram of how the McDonald’s business work
4:43 – The real McDonald’s business model
5:11 – How real estate lets McDonald’s pay less money in taxes
6:09 – How you can model the McDonald’s business model in your life

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Twitter: @M2JaspreetSingh
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This Video:

Video host: Jaspreet Singh <br> <h3>Auto Generated Captions</h3>

What’s up everybody, I am Jaspreet Singh,
and welcome to the Minority Mindset.
What is McDonald’s moneymaker?
Cheeseburgers? Nope. French fries?
Hmmm, Close, but no. Funny face
pancakes. Uuh no, that’s IHOP. It’s their
real estate. Let me let you in on a
little secret.
Come close, they don’t want you to hear
this. McDonald’s isn’t actually in the
Burgers and Fries business. What do you mean
Jaspreet? Mmm, I haven’t had fries in a
long time. Yeah, they sell burgers and
fries, but they have a little secret
business model, behind their burgers and
fries, which allows them to bring in the
big profits, and even bigger tax breaks.
But, before we get into how it exactly
works, make sure you hit that thumbs up
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Okay, so the truth is, McDonald’s is a
real-estate company that sells burgers.
They sell you burgers, this way they can
grow their real-estate empire. If you’ve
seen the movie The Founder—which talks about
the growth, and the birth of McDonald’s—you
might remember the scene where Ray Kroc,
who is known for growing McDonald’s, is
told: Ray, you don’t seem to understand
what business you’re in, you’re not in
the burger business, you are in the real
estate business. You don’t build an
empire, off of an one-point-four percent
cut on a 15 cent burger. You build an
empire, 42 by owning the real
estate, upon which the
burgers are cooked. And that’s, when
McDonald’s shifted from the burger
business, to the real estate business.
Here’s how the business model works:
McDonald’s creates their favorite
products, you know the Big Mac, the fries
the McFlurry, not so they can sell you
these things that make 25 cents, they
make these things, this way business
owners and investors start salivating. No,
it’s not because they’re smelling the
fries. When business owners and investors
see the long lines at McDonald’s, they
get excited, because they want to invest
in, and get a piece of the action.
And, that’s when the business owners, the
investors, and the
entrepreneurs, they go to McDonald’s, and
just say: hey! is there any way we can get
in on this Mc-action. And, then McDonald’s
will say something like: Ha, that is a
great idea mr. or mrs. entrepreneur, and
you know what, we’ll let you sell our
food, our products, and the name. All you
have to do, is pay us a small percentage
of your sales, and you know what, because
I like you so much, I’ll even build you your own McDonald’s
franchise, this way you have nothing to worry about.
But, here’s the kicker:
This new entrepreneur can’t just go, and
open up this McDonald’s franchise
anywhere they want, the McDonald’s
Corporation gets to decide that, and
McDonald’s will only want to open up
restaurants, in areas, where there’s a
whole lot of demand. You ready for the
best part? McDonald’s, the corporation,
will then find you an amazing location,
and they will build you your property,
and they’ll get everything systemized, and
ready for you to go this way you can sell a
whole bunch of, you know, happy meals, and
then you, get to pay McDonald’s, the
corporation, rent forever, because you are
using their real estate. Hmm, that’s one
smart happy meal. Maybe they should start
teaching financial literacy, instead of
giving games in their happy meals.
Let me diagram this out, because this is
big. So over here, you have McDonald’s, the
corporation, and McDonald’s creates their
Mc-menu, with their burgers, fries, and
everything in between—
you know gotta make the burger look good—
and then you come in, as the entrepreneur,
the investor, the businessperson, and you
want to open up your own McDonald’s
store, this way you can get in on the
action. So, what you do is, you are going
to pay McDonald’s tens of thousands of
dollars as a franchise fee, this way you
can open your own McDonald’s restaurant.
So, then McDonald’s will open up a
McDonald’s restaurant for you, and then,
you are going to sell these burgers, and
every time you make a sale for these
burgers, you’re going to pay McDonald’s a
little royalty, because you’re selling
the McDonald’s menu, and then no matter
what happens, you are going to have to pay
rent to the McDonald’s Corporation,
because you are using
their real estate, and so now this
process repeats itself, and it repeats
itself, and now, you have over—thirty
seven thousand McDonald’s locations
across the country paying McDonald’s rent.
See, McDonald’s is using burgers to fuel
their real-estate Empire, which is their
real business model. As long as people
are buying happy meals, and Big Macs,
business owners, and investors will want
to come in, and open up their own
franchise. So, this allows McDonald’s, the
corporation, to buy the most prime-time
real estate in the world, and they will
have guaranteed rent, with no vacancies,
and a tenant they trust. The royalties
from the burgers are just the Mc-frosting
on top. Plus, on top of all of
that, this real estate business model
allows McDonald’s, the corporation, to
make millions, and millions, and millions
of dollars from rent, and pay almost no
money in taxes legally, because real
estate investors get tax breaks. Now,
don’t get me wrong,
most McDonald’s franchisees are still
making good money. Hopefully these
franchise owners are using their profits
to build their own real estate empire,
but you have to understand that the
corporation needs the franchise owners
to be profitable, this way more
business owners, and investors will want
to come in, and open up their own
McDonald’s restaurant. So, while the
majority people think of McDonald’s as
over 99 billion burgers sold, I want you
to think of McDonald’s as over 37,000
tenants worldwide, with not a vacancy in
sight. Now, you can kind of see why
McDonald’s has such a successful
business model. The burgers and fries are
almost like McDonald’s side hustle. And,
this is why I keep hammering home the
idea of real estate investing, because
real estate brings you consistent
passive income and tax breaks. Now, while
McDonald’s is doing this on a massive,
massive scale, this is something you can
be doing too, by modeling what McDonald’s
is doing. You don’t have to sell your own
burgers and fries, but you can start
acquiring your own real estate to start
generating passive income, while creating
tax breaks. I made a couple of videos
showing you how to do this, even if you
don’t have a ton of money to start, and
I’ll link those videos for you in the
description below. Now you know why
McDonald’s keeps saying:
♪, I’m loving it. They love
this real estate game. And, for those of you
who are interested in
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