Happy meal
McDonald's franchises flip profits
Good morning, french-fry fans. This is your Stock Market Rundown for September 25th, 2023. Time to launch ourselves headfirst into a new week. Let’s proceed:
TODAY’S TOP STORY: UNDER THE GOLDEN ARCHES 🍔
Ronald may be a clown, but partnering with him ain’t cheap. McDonald’s has just announced its franchise fees are going up, from 4% to 5%.
Translation: McDonald’s Corporation gets five cents for every dollar you spend on Quarter Pounder combos at your local neighbourhood location. Plus, McDonald’s owns the land under most restaurants, so franchisees pay rent to the parent company, too.
The genius of the franchise model is that these royalties are charged based on revenue, before any expenses are deducted. Whether or not your franchise is profitable, McDonald’s still gets their cut on every apple pie and Filet-o-Fish.
Ninety-five percent of McDonald’s US restaurants are franchises, and they pour out cash faster than a soda fountain dispensing Diet Coke. The corporation announced a double-digit increase in US sales in their most recently-reported quarter.
Want to get in on this McFlurry of profits by becoming a franchisee? Prepare to pay up. Not many new McDonald’s restaurants are opening in the US, so most new franchisees these days get into it by buying an existing restaurant. To qualify, you’ll need management experience, and ample liquid assets.
And don’t expect passive income: McDonald’s insists that prospective franchisees work in the business full-time. Will you still be lovin’ it when you’re supervising surly employees, cleaning out the grease trap, and struggling to fix the busted ice cream machine?
SO WHAT ELSE IS GOING ON?
Meat processors Tyson and Perdue are being investigated by the government for child labour violations. Thirteen-year-olds should be in school, not cleaning grease and feathers off slaughterhouse machinery.
A privately-owned high-speed passenger rail line just opened in Florida, with tickets starting at $79. It only travels between Miami and Orlando, so there’s no risk you’ll fall asleep and wake up in Tallahassee.
Olive Garden’s parent company, Darden, recently reported quarterly earnings that beat expectations. To keep the chicken alfredo flowing, Olive Garden is bringing back its “never-ending pasta bowl” promotion. Just in time for your winter bulk.
The Container Store is struggling—they just did a big layoff, and the CEO voluntarily reduced his salary by 10%. I’m sure they’ll recover, given they’re the nation’s leading vendor of stuff into which you can put other stuff.
Some major airlines have fallen prey to a big scam: they were sold bogus parts, which were then used to repair jets. Here’s a tip, Southwest: don’t buy engine components off Facebook Marketplace from a guy you meet up with in a Dunkin’ Donuts parking lot.
That’s it for today, friends; see you bright and early tomorrow. Yours in capitalism, The Axe