McDONALD’S: What Franchisees Make on a $1 Burger

Question:  Can McDonald’s franchise owners really make money on a dollar-menu hamburger?

Answer:  A little.  But they’ve got to make it up on higher profit items – like fries and soda – if they want to stay in business.

SmartMoney.com surveyed franchisees from different franchise chains regarding the cost to them of some current and recent promotions. The Smart Money article points out that franchisees generally bear the brunt of a promotions’s cost, including the food, labor, rent and utilities, among other things.

Here’s the Smart Money finding for the McDonald’s $1 burger on their dollar menu, which report a $.06 profit per sandwich:

McDonald’s

Promotion: Dollar Menu – McDonald’s customers may purchase a number of items, including French fries, an ice cream sundae, a four-piece chicken nuggets and a double cheeseburger for a dollar each.

Pre-promotion price: $1.50 (double cheeseburger)

Promotion Price: $1

Bottom line for restaurant: Profit of roughly 6 cents a burger

The McDonald’s Dollar Menu may be the best value in town, but some franchisees find the six-year-old promotion hard to stomach. While food and packaging costs just 45 cents for a double cheese burger, franchisees also have to pay for rent, labor and utilities. In total, a promotional price of just $1 leaves store operators with a measly 6 cents of profit, according to a franchisee in Florida. Of course the markup on fountain drinks and French fries is typically pretty high. However, many consumers these days are forgoing such add-ons. McDonald’s did not immediately return phone calls and emails seeking comment.

RELATED POSTS:

SUBWAY: What Do Franchisees Make on $5 Footlongs?

LITTLE CAESARS: What Franchisees Make on a $5 Pizza

McDONALD’S: What Franchisees Make on a $1 Burger

BASKIN ROBBINS: Franchisees Lose $1.45 per Scoop on Promo

QUIZNOS: Franchisees Lost $2.25 per Sub on Giveaway

BURGER KING Franchisees Sue Over $1 Cheeseburgers

WHAT DO YOU THINK OF McDONALD’S VALUE MENU PROMOTIONS?  SHARE A COMMENT BELOW.

Are McDONALD’S Franchise Owners Happy?

Are you familiar with the McDonald’s franchise opportunity?

Are McDonald’s franchise owners happy?  Why or why not?

Please share your thoughts and opinions below.

*     *     *    *    *

In the 30 years since it launched its much-hyped Franchise 500, Entrepreneur magazine has named McDonald’s the #1 franchise 8 times (only half as many times as Subway).

In recent years, Entrepreneur has ranked McDonald’s #2 (2009); #5 (2008); #9 (2007); #16 (2006); and #13 (2005).

There are more than 2400 McDonald’s franchise owners in the U.S., owning 13,000 franchised locations.  40% are women or minorities.

According to McDonald’s:

McDonald’s has always been a franchising company and has relied on its Owner/Operators to play a major role in the System’s success. McDonald’s remains committed to franchising as a predominant way of doing business…  McDonald’s continues to be recognized as a premier franchising company around the world. We believe a major component of this is the world class training you receive prior to becoming an Owner/Operator. McDonald’s provides hands on training and the materials you need to be a success in your restaurant business.

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A McDONALD’S FRANCHISE?  ARE McDONALD’S FRANCHISEES HAPPY?  WHY OR WHY NOT?

logo:  McDonald’s Corporation