From a small northwestern observatory…

For the quarter ending June 30, McDonalds (yes, the hamburger people) reported gross revenues of $3.76 Billion. Let that sink in.

Of that, only $1.59 Billion was from company owned restaurants. The rest, $2.09 Billion was fees from franchisees. (There was also some minor misc revenue, but not much.) So, of the $2.09 Billion from franchisees, $1.31 Billion was from “rents”. That’s slightly over 1/3 of their entire top line, and it pretty much all flows to the net income line. You see, McDonalds owns boatloads of real estate. They own the dirt under the franchisees locations, and rents that dirt (we call those “net ground leases”) back to the franchisees, as a way of controlling the locations.

I point this out to remind you that yes, McDonalds is in the hamburger biz, but they are much, much, more in the real estate biz. For that matter, so is every business, they often just don’t realize it.

Oh, and I’ll do the quick math for you. That means McDonalds will collect approximately $5.2 Billion in rents this year. Let that sink in, too.