You could make the back room potentially a lot smaller if it was all in a machine.
As for the link - I don't buy his arguments:
"First, it buys and sells properties, as one might suspect."
I've never seen a McDonald's close down. I'm sure they do sometimes, but they probably realize really quickly if the place will be profitable or if it needs to be sold asap. So effectively they never cash in on any long term real-estate investments. If the real-estate values goes up, more than likely you're gunna be selling more burgers too.
The second point he makes is kinda semantic. At the end of the day McDonalds needs to extract money from the franchise. They can charge more for using the brand, more for the ingredients or more for rent or whatever. It doesn't really have any significance. At the end they are trying to get as much money as possible out of the franchise without running the owners bankrupt.
His last point about them getting bought and all their real-estate sold.. I dunno maybe he was trying to just be cute - but net worth of assets is taken into account into the stock price. It's the kind of stuff that's on quarterly reports. Kinda scary that this guy is an investor.
It's a real estate company because for many franchise stores, it owns the land and collects rent and franchise fee from the franchisees.
“McDonald’s real moneymaking engine was its little-known real estate business, Franchise Realty Corporation; envisioned and created by Harry Sonneborn. The obscure McDonald’s alter ego company was based on Sonneborn’s unique even lesser known financial formula.”
http://en.wikipedia.org/wiki/Harry_J._Sonneborn (First CEO)
As I explained the "rent" is just a way of extracting money from the franchise. They are not necessarily charging the local market rate for commercial real estate (if it's a very busy McDonalds they can charge way more). They don't realistically sit down and consider maybe replacing the McDonalds with an American Apparel so they can charge more rent. So it's not the typical landlord<->renter relationship where the landlord considers getting new tenants and the renter considers moving to a new place.
Fewer people will see one close down than you might expect; the ones that close down are the ones that not enough people go to, so only small numbers of people see it close down - if lots of people were there to see it close, it wouldn't be closing.
I'm sad that these restaurants are what I'll be faced with if I ever visit Glasgow. I visited the UAE and McDonalds, Hardees, KFC, and Burger King were by far the most common places to eat there; much more common than local restaurants.
There used to be McDonalds on university avenue near UW in Seattle, they closed it down sometime after I graduated. That was a high traffic store also, so it must have been a lease issue.
> I've never seen a McDonald's close down. I'm sure they do sometimes, but
FWIW, I've seen two close down. This is in Brisbane, Australia (for those who are interested, one on Roma St, and another a bit further out, near the Albion Five-ways IIRC). They'd both been around for a while.
Not saying this changes anything about your point, just making an observation.
>You could make the back room potentially a lot smaller if it was all in a machine.
You might not want to, though. You might want to keep the redundant infrastructure around in case the automation breaks down and you need somebody to flip burgers in the interim, after all, the jobs you're replacing aren't terribly skilled.
You've never seen one close down, because they do extensive research on vetting each location before they put one up; but also, they remove all identifying signage etc. within 24 hours of a location being closed, since they don't want to hurt their brand by implying failure.
As for the link - I don't buy his arguments: "First, it buys and sells properties, as one might suspect."
I've never seen a McDonald's close down. I'm sure they do sometimes, but they probably realize really quickly if the place will be profitable or if it needs to be sold asap. So effectively they never cash in on any long term real-estate investments. If the real-estate values goes up, more than likely you're gunna be selling more burgers too.
The second point he makes is kinda semantic. At the end of the day McDonalds needs to extract money from the franchise. They can charge more for using the brand, more for the ingredients or more for rent or whatever. It doesn't really have any significance. At the end they are trying to get as much money as possible out of the franchise without running the owners bankrupt.
His last point about them getting bought and all their real-estate sold.. I dunno maybe he was trying to just be cute - but net worth of assets is taken into account into the stock price. It's the kind of stuff that's on quarterly reports. Kinda scary that this guy is an investor.