how much does it cost to open a mcdonald’s ? One of the most well-known and prosperous fast-food restaurants in the world, McDonald’s generates billions of dollars in revenue annually.
Perhaps starting a new initiative, which could involve running a business, appeals to you.
And also you don’t want to start from scratch, but rather join an existing company with a proven way of operating. You seem like the ideal person for a franchise.
However, if you’ve ever considered purchasing a McDonald’s franchise, keep reading to find out how difficult and expensive it may be to become an owner.
It also makes sense that individuals would want to know how much it would cost them to join in on the action given their ongoing financial success.
The franchisor estimates for the opening of one McDonald’s restaurant are discussed in this article.
McDonald’s, however, frequently tops rankings of franchises of all kinds, making it likely the most well-known franchise in the world (including ours).
What makes McDonald’s so well-liked? One reason is that despite not having the most locations globally 7-Eleven holds that title. Moreso, it consistently generates the highest profits for franchises year after year.
You might be worried about the expense of a McDonald’s franchise if you’ve been considering opening a franchised McDonald’s business.
How Much Does it Cost to Open McDonald’s in 2022?
- Traditional Restaurant: We can find these franchises in mall food courts, standalone structures, and other places. The franchisee runs a restaurant with a full menu and provides the public with high-quality, consistently prepared food and services.
- Satellite Locations: McDonald’s franchise run in a variety of settings, including retail stores, strip malls, airports, universities, hospitals, and others. In some circumstances, these eateries may also serve non-trademarked McDonald’s goods in addition to a condensed version of the conventional McDonald’s menu.
- Outlets for STO and STR: “Small Town Oil” locations are found at gas stations or convenience stores, and they run a full-service McDonald’s restaurant inside a communal area. Also, small Town Retail refers to establishments that support a modest retail complex in a rural area.
Also, a significant distinction between McDonald’s and a sizable portion of other franchise systems is that McDonald’s owns the land and buildings for its locations before franchising the right to run the place.
At the same time, the franchisee pays McDonald’s rent.
In most other situations, a system’s franchisees are in charge of purchasing the land, but building the structure, or performing any necessary improvements on leased property.
Additionally, McDonald’s offers two different restaurant purchase options: new and used. The first down payment requirement is the area where this differs from the most.
The down payment for brand-new restaurants is 40% of the total price.
The down payment for restaurants that are already open is 25% of the entire price. They cannot use borrowed money for the down payment.
However, the remaining balance of the restaurant purchase price must be paid off within the first seven years of operation.
Moreso, if they use financing in any form for the remaining original investment expenditures.
Equally, to become a McDonald’s franchisee, more than only the initial investment is necessary. The franchisor must also have at least $500,000 in liquid cash (a few exceptions apply).
It takes into consideration ongoing living costs until the franchise unit starts making a profit big enough for the franchisee to get decent take-home pay.
What to Know About McDonald’s Franchise
Richard and Maurice McDonald established the fast-food restaurant franchise McDonald’s in 1940 as a drive-in.
Similarly, they initially offered set pricing for a limited menu at an American drive-in restaurant in 1948 when they established the Speedee Service System.
The business was seeking ways to provide its clients with faster service and a more reliable product.
Although to do just that, the Speedee Service System was built, and clients took to it right away. Also, Burgers, chicken, salads, fries, desserts, and breakfast dishes are just a few of the products available on the McDonald’s menu.
McDonald’s provides McCafe coffee beverages and Happy Meals for kids. McDonald’s has been attempting to enhance both its brand and menu in recent years.
The business has expanded its menu to include healthier options and has launched fresh programs like the “My McDonald’s” app, which lets customers personalize their meals.
The franchisee will own and run a quick-service restaurant employing the McDonald’s System with a small menu of value-priced items.
However, a typical unit may accommodate about 50 people for seating. They will run the establishment in accordance with McDonald’s exacting standards for quality, value, and cleanliness.
Consequently, the eatery will serve breakfast, lunch, and supper meals in addition to a selection of McCafe coffee beverages.
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How Much Does a McDonald’s Franchise Cost?
The initial investment range for McDonald’s ranges from $464,500 to $2,306,500, with a franchise fee of up to $45,000.
- Beginning sums: $464,500 to $2,306,500
- Required Liquid Cash: $500,000
- $45,000 is the initial franchise fee.
- Regular Royalty Payment: 4%
- Ad Royalty: 4% and Above
- An estimated $481,000 to $2,450,000 will be needed for the initial setup and first three months of operation of a new McDonald’s restaurant.
Using its many years of franchising system experience, McDonald’s provided the estimate.
|Name of Fee||Low||High|
|Initial Franchise Fee||$0||$45,000|
|Real Estate and Building – 3 month’s rent||Base Rent: $0 Percentage Rent: 0%||Base Rent: $313,000 Percentage Rent: 31.75%|
|Signs, Seating, Equipment, and Décor||$340,000||$1,600,000|
|Miscellaneous Opening Expenses||$48,000||$60,000|
|Travel and Living Expenses while Training||$3,000||$38,000|
|Additional Funds – 3 months||$80,000||$355,000|
Although, in order to completely launch operations, a McDonald’s franchise will cost between $1 million and $2.2 million as of 2022.
Also, franchisees must have at least $500,000 in liquid assets to begin the application process for a McDonald’s location. Moreover, a $45,000 franchise fee is necessary.
Therefore, the cost of purchasing your own share of the Golden Arches is not listed on the McDonald’s website sections dedicated to possible restaurant ownership, other than the statement that it is a “substantial investment,” despite the fact that McDonald’s is open about many of the franchisee criteria.
We will go over a lot more information below that you should be aware of when buying a McDonald’s franchise.
Annual Salary of a McDonald’s Franchise Owner
The average annual income of a McDonald’s franchise owner is $150,000, although this figure might change based on the area and level of popularity.
Furthermore, a McDonald’s restaurant typically makes $2.7 million in annual sales.
You must also exclude the expenditures related to payroll, food, materials, and any other expenses that corporate mandates the franchise owner to pay.
The franchise owner will then receive about $150,000 annually.
Is Owning a McDonald’s Franchise Valuable?
Owning a McDonald’s franchise can be worthwhile given that annual sales can reach well over $2 million.
Unfortunately, there are a lot of extra expenses involved, such as paying real estate taxes, maintaining the yard, and unforeseen upgrades.
Additionally, the franchise owner is in charge of remodeling, decorating, and updating the kitchen’s equipment. The cost of improvements increases with the age of McDonald’s.
Although upgrades can easily cost up to $1 million, which reduces revenues, a franchise owner can still earn more than $150,000 annually.
Can Anyone Purchase a Franchise With McDonald’s?
Sadly, due to the high expenditures involved in becoming a franchise owner, not just anyone can buy a franchise at McDonald’s.
At least $500,000 in liquid assets must be on hand, while it is preferable to have liquid assets closer to $700,000.
Also, a franchise fee of $45,000 is furthermore required and is paid to the franchisor.
Additionally, you must be able to come up with 40% of the $1 million to $2.2 million in startup costs on your own; however, you can finance the other 60%.
What Must I Do Before I Can Own a McDonald’s Franchise?
Firstly, you must go through a drawn-out application process in which you are required to provide details about your finances, net worth, location, and also any prior arrests you may have made.
The McDonald’s franchise application is only the beginning of the procedure, but there will probably be more steps where additional important information may be requested.
Before you can buy a franchise, though, you must complete a training course. It is necessary for everybody who has a sincere interest in a franchise and lasts for somewhere between 12 and 18 months.
The cost to open a McDonald’s franchise can range from $1 million to $2.2 million, and you must have at least $500,000 in liquid assets.
Additionally, the predicted $2 million in annual profits can be greatly reduced by renovations due to the high operating expenses, including payroll.
Not to mention that your potential revenues and income as a franchise owner will depend on the location and size of your store.
Despite this, opening a McDonald’s franchise can still be quite profitable, with median yearly earnings of $150,000 or more.