McDonald's leases its store locations and brand to franchisees worldwide, then collects rent and royalties from every burger those stores sell — 95% of its stores are franchised, not company-owned.
How McDonald's makes money
95% of McDonald's roughly 45,356 stores worldwide are franchisee-owned. Franchisees lease the land and building and run the store, paying a percentage of revenue (rent plus royalty) to headquarters. The remaining 5% are company-operated, where all revenue goes to McDonald's directly. That cash gets reinvested into real estate, brand, and menu development, making stores more attractive and pulling customers back — a self-reinforcing loop.
Company-operated stores (5%) contribute their full revenue directly to McDonald's. Source: 10-K FY2025, p.3-4 (business overview), p.51 (segment structure).
Where the revenue comes from
| Segment | Revenue | Share | Operating margin |
|---|---|---|---|
| United States | $10,825M | 40.3% | 53.7% |
| International Operated Markets | $13,633M | 50.7% | 46.8% |
| International Developmental Licensed Markets & Corporate | $2,427M | 9.0% | 8.4% |
International Operated Markets covers countries like France, Germany, the UK, Canada, and Australia, where McDonald's directly owns and operates stores. International Developmental Licensed Markets covers 75-plus countries — including China and Japan — where McDonald's participates through equity investment rather than direct ownership, plus corporate overhead costs.
Source: 10-K FY2025, p.14, p.18, p.52 (segment notes).
Customers and competitors
Nearly all sales are B2C, but about 61% of McDonald's revenue (franchise revenue) effectively comes from franchisees rather than end consumers directly. There's no large-customer concentration risk — instead, risk depends on the average financial health of tens of thousands of franchisees worldwide.
- Yum! Brands (KFC, Taco Bell, Pizza Hut) — a similarly super-franchised model, but spreads risk across a more diversified brand portfolio.
- Restaurant Brands International (Burger King, Tim Hortons, Popeyes) — the most direct competitor in burgers, with a smaller market cap.
- Starbucks and local cafes — compete for morning coffee demand against McCafé and breakfast offerings.
Source: 10-K FY2025, p.6 (competitive environment); competitor list from web search.
The metric that matters most in this sector
Comparable sales growth shows whether existing stores are actually selling more — not whether the company just opened more locations. Adding stores and improving existing-store performance are completely different stories, which is why this number is the real measure of underlying health.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Total | +13.8% | +9.6% | +8.7% | -0.1% | +3.1% |
2021-2023 saw near-double-digit growth from post-pandemic revenge spending combined with inflation-driven price increases. 2024 growth essentially stalled worldwide, before rebounding to +3.1% in 2025.
Source: 10-K FY2025, FY2022, FY2021, p.14 in each.
Leadership and ownership
Christopher Kempczinski has been Chairman and CEO since November 2019 (Chairman role added 2024), age 57 — joined from Kraft-Heinz in 2015, ran the U.S. business before becoming CEO. Founder Ray Kroc died long ago, and no founding-family members remain involved — professional management throughout. Insiders own under 1% of shares; the largest holders are Vanguard (10.03%), BlackRock (7.3%), and State Street (5.1%), a typical institutional-investor-dominated ownership structure.
Source: DEF 14A 2026, p.28 (CEO background), p.87-88 (ownership).
Capital returns
McDonald's has raised its dividend for 50 consecutive years (a Dividend Aristocrat). 2025's actual dividend paid was $7.17/share; the Q4 2025 annualized rate reached $7.44/share ($1.86 quarterly × 4), yielding about 2.7% at the current price. 2025 buybacks were 6.7 million shares ($2.0B); 2024's were 10.1 million shares ($2.8B). Diluted shares outstanding fell from 751.8 million (2021) to 716.4 million (2025) — a real 4.7% reduction, with buybacks more than offsetting compensation-related dilution.
Source: 10-K FY2025, p.8 (2025 summary), p.13 (buybacks), p.21 (dividend streak).
How this company could fail
- Consumer health-trend shifts — the spread of GLP-1 drugs, changing diets, and tighter regulation could structurally reduce demand for burgers and fries.
- Franchisee-dependence risk — most revenue is tied to franchisee sales and financial capacity, so a broad decline in franchisee health hits headquarters results directly.
- Rising labor costs and labor shortages — minimum-wage increases and hiring competition worldwide squeeze franchisee profitability, which in turn affects their ability to pay royalties.
Source: 10-K FY2025, Risk Factors, p.28-30.
Five-year financials
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Revenue | 23,223 | 23,183 | 25,494 | 25,920 | 26,885 |
| YoY growth | — | -0.2% | +10.0% | +1.7% | +3.7% |
| Operating income (margin) | 10,356 (44.6%) | 9,371 (40.4%) | 11,647 (45.7%) | 11,712 (45.2%) | 12,393 (46.1%) |
| Free cash flow | 7,102 | 5,488 | 7,254 | 6,672 | 7,186 |
| Total debt | 35,623 | 35,904 | 39,345 | 38,424 | 39,973 |
Source: 10-K FY2025 p.12, p.41-42, p.52; 10-K FY2023, FY2022, FY2021 (prior-year figures).
What we still don't know
- How much AI-driven store-operations and order-automation investment is actually reducing costs isn't clear from this data — recent earnings calls would help.
- Individual-country performance in equity-investment markets (China, Japan) isn't broken out beyond the combined licensed-markets segment.
- When "Accelerating the Organization" restructuring charges will end, and for how many more quarters they'll continue needs confirmation.
Frequently asked questions
How does McDonald's make money?
McDonald's leases its store locations and brand to franchisees worldwide, then collects rent and royalties from every burger those stores sell — 95% of its stores are franchised, not company-owned.
Why is McDonald's operating margin so high for a restaurant company?
Because McDonald's is really a real-estate and licensing company, not a restaurant operator — it collects rent and royalties from franchisees rather than bearing food and labor costs directly, producing a 46.1% operating margin far above typical restaurant chains.
What is McDonald's market cap?
As of this article's data, McDonald's market cap was about $195.0B, on FY2025 revenue of $26.9B.