4 ms·

> Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it McDonalds had $1.9B in profit in 20

> Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it McDonalds had $1.9B in profit in 2022. $1.6B in 2021. Starbucks had $3.3B in profit in 2022. $3.6B in 2021. Subway announced they had beaten sales plans by $1.4B in 2021. It's not the wages that are the issue making the prices go up. These companies aren't hurting for profit.

jfghjhgfjhfg 3y ago
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credit_guy 3y ago
> McDonalds had $1.9B in profit in 2022 Out of curiosity, what does that mean? It appears to me the main business of McDonald's is to collect franchising fees. Most McDonald's fast food joints (93%) are owned and operated by independent local business owners, who have to pay McDonald's-the-company the frinchising fees, which are about $45k/year [1]. So, I can see how McDonald's, the company, can be highly profitable, while individual stores could be barely surviving. [1] https://www.investopedia.com/articles/insights/072516/cost-buying-mcdonalds-franchise-mcd.asp https://www.investopedia.com/articles/insights/072516/cost-b...
- sschueller 3y ago
  Don't they also pay % on top of the franchise fee as well as are required to purchase all the food and werez from Macdonalds which I assume also got more expensive.
- yunohn 3y ago
  AFAIU McDonald’s sets menu prices, so presumably they make sure franchises can be net positive despite item costs and fees.
- verall 3y ago
  Sure, and if those individual franchises start failing or finding other corporate overlords, then McDs profits may go down and they may have to reduce those fees in order to remain competitive. Such is capitalism. Does this equilibrium-finding method create undo misery and stress for the franchise owners? I would say yes. If franchisees banded together to negotiate in order to extract better fee arrangements from McDs without going through individual bankruptcy, well...
  - mattzito 3y ago
    Since the franchisees are themselves independent businesses, wouldn’t this constitute collusion and price fixing? Something similar was raised around discussions about Uber drivers jointly negotiating rates with Uber.
- user3939382 3y ago
  1/5th of locations aren’t franchise. The fees are a market price that are coming out of the same pot that covers wages so the two are related.
ETH_start 3y ago
Profit is the compensation paid to investors. Without it, there is no investment, and thus no increases in productivity.
rayiner 3y ago
Your assertion makes no sense without comparing the profit to the scope of the enterprise. Put another way, for a $4.25 grande latte, Starbucks generates about $0.43 in profit.
MR4D 3y ago
There are approximately 40K McDonald’s in the world. That’s about USD 50,000 in profit per location. If you think that’s egregious, then we aren’t going to agree on much.
- adgjlsfhk1 3y ago
  Note that given the franchise model, that's 50k profit on basically no expenses (i.e. you aren't looking at the profit of the stores, that's the amount of money being taken out of each store by McDonalds in addition to the profit that the owners are making). McDonalds isn't paying for the employees or the food or the buildings. That's just the tax they are charging the franchises for the privilege of calling themselves a McDonalds store.
  - AussieWog93 3y ago
    >basically no expenses I could imagine marketing and PR alone on the scale of a McDonalds would be hugely costly, easily in the high hundred millions or billions.
  - badpun 3y ago
    > Note that given the franchise model, that's 50k profit on basically no expenses Profit is already past expenses. > That's just the tax they are charging the franchises for the privilege of calling themselves a McDonalds store. McDonalds does plenty for the franchise restaurants: 1. Brand recognition and marketing which bring in tons of customers, without the franchise owner having to spend a cent. 2. Recipes that will sell. Franchise owners does not have to know anything about cooking, people's tastes etc. It's all covered by McDonald's R&D. 3. Efficient operations. Similar to the above, franchise owner's does not need to know anything about running an efficient restaurant. All equipment design as well as day-to-day operational procedures are standardized, highly efficient, and provided by McDonalds. 4. Employee training. 5. Restaurant interior design. Again, provided by McDonald - no need to think about it, no area to make costly mistakes by inexperienced owner. 6. Supplies. No need to worry about managing supplies and suppliers - it's all provided by McDonalds. In fact, McDonalds does so much for a franchise owner that he's somewhat closer to a glorified manager with a profit sharing agreement, that to a real business owner.
AlchemistCamp 3y ago
Aside from the confusion around franchisee vs franchisor numbers pointed out by others, total profit isn’t a useful metric unless you also provide the number of meals sold per year. What matters when discussing unit prices is margins. For example, if a company makes a profit of $10B on a trillion units sold, they likely couldn’t even afford to absorb a marginal cost increase of two cents per unit. In contrast, if they’re making $10B in profit on ten units sold, then a cost increase of a million dollars per unit would have a negligible impact on their bottom line.
thegrim22 3y ago
At least correct for inflation .. they could be making the same exact profit margins every year but as long as there's inflation, the number will be bigger every single year. Just saying "but number bigger!" doesn't mean squat.

jfghjhgfjhfg 3y ago

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credit_guy 3y ago

> McDonalds had $1.9B in profit in 2022 Out of curiosity, what does that mean? It appears to me the main business of McDonald's is to collect franchising fees. Most McDonald's fast food joints (93%) are owned and operated by independent local business owners, who have to pay McDonald's-the-company the frinchising fees, which are about $45k/year [1]. So, I can see how McDonald's, the company, can be highly profitable, while individual stores could be barely surviving. [1] https://www.investopedia.com/articles/insights/072516/cost-buying-mcdonalds-franchise-mcd.asp https://www.investopedia.com/articles/insights/072516/cost-b...

sschueller 3y ago
Don't they also pay % on top of the franchise fee as well as are required to purchase all the food and werez from Macdonalds which I assume also got more expensive.
yunohn 3y ago
AFAIU McDonald’s sets menu prices, so presumably they make sure franchises can be net positive despite item costs and fees.
verall 3y ago
Sure, and if those individual franchises start failing or finding other corporate overlords, then McDs profits may go down and they may have to reduce those fees in order to remain competitive. Such is capitalism. Does this equilibrium-finding method create undo misery and stress for the franchise owners? I would say yes. If franchisees banded together to negotiate in order to extract better fee arrangements from McDs without going through individual bankruptcy, well...
- mattzito 3y ago
  Since the franchisees are themselves independent businesses, wouldn’t this constitute collusion and price fixing? Something similar was raised around discussions about Uber drivers jointly negotiating rates with Uber.
user3939382 3y ago
1/5th of locations aren’t franchise. The fees are a market price that are coming out of the same pot that covers wages so the two are related.

ETH_start 3y ago

Profit is the compensation paid to investors. Without it, there is no investment, and thus no increases in productivity.

rayiner 3y ago

Your assertion makes no sense without comparing the profit to the scope of the enterprise. Put another way, for a $4.25 grande latte, Starbucks generates about $0.43 in profit.

MR4D 3y ago

There are approximately 40K McDonald’s in the world. That’s about USD 50,000 in profit per location. If you think that’s egregious, then we aren’t going to agree on much.

adgjlsfhk1 3y ago
Note that given the franchise model, that's 50k profit on basically no expenses (i.e. you aren't looking at the profit of the stores, that's the amount of money being taken out of each store by McDonalds in addition to the profit that the owners are making). McDonalds isn't paying for the employees or the food or the buildings. That's just the tax they are charging the franchises for the privilege of calling themselves a McDonalds store.
- AussieWog93 3y ago
  >basically no expenses I could imagine marketing and PR alone on the scale of a McDonalds would be hugely costly, easily in the high hundred millions or billions.
- badpun 3y ago
  > Note that given the franchise model, that's 50k profit on basically no expenses Profit is already past expenses. > That's just the tax they are charging the franchises for the privilege of calling themselves a McDonalds store. McDonalds does plenty for the franchise restaurants: 1. Brand recognition and marketing which bring in tons of customers, without the franchise owner having to spend a cent. 2. Recipes that will sell. Franchise owners does not have to know anything about cooking, people's tastes etc. It's all covered by McDonald's R&D. 3. Efficient operations. Similar to the above, franchise owner's does not need to know anything about running an efficient restaurant. All equipment design as well as day-to-day operational procedures are standardized, highly efficient, and provided by McDonalds. 4. Employee training. 5. Restaurant interior design. Again, provided by McDonald - no need to think about it, no area to make costly mistakes by inexperienced owner. 6. Supplies. No need to worry about managing supplies and suppliers - it's all provided by McDonalds. In fact, McDonalds does so much for a franchise owner that he's somewhat closer to a glorified manager with a profit sharing agreement, that to a real business owner.

AlchemistCamp 3y ago

Aside from the confusion around franchisee vs franchisor numbers pointed out by others, total profit isn’t a useful metric unless you also provide the number of meals sold per year. What matters when discussing unit prices is margins. For example, if a company makes a profit of $10B on a trillion units sold, they likely couldn’t even afford to absorb a marginal cost increase of two cents per unit. In contrast, if they’re making $10B in profit on ten units sold, then a cost increase of a million dollars per unit would have a negligible impact on their bottom line.

thegrim22 3y ago

At least correct for inflation .. they could be making the same exact profit margins every year but as long as there's inflation, the number will be bigger every single year. Just saying "but number bigger!" doesn't mean squat.