McDonald's Real Estate, Part Deux

Our real estate discussion has gotten a little off track since we can't change the long-standing McDonald's Owner/Operator facility ownership policy. I intended to discuss modern McDonald's real estate as it applies to the McDonald's franchise. There are things happening today that were unthinkable 20 years ago.

For instance, a McDonald's in western Michigan just closed, yet according to satellite photos, it looks like a contemporary facility. Someone spent a lot of money developing and improving this store, yet the Owner/Operator had to walk away. Is this happening more frequently?

Stevensville MI is directly across the lake from Chicagoland

This is why it's a good idea to know the real estate status of each of your stores.

But as long as the history of Owner/Operator capital investments has been mentioned ... there's little fruit in comparing what McDonald's policies were in the early years and their motives today.

When it came time convert the red and white buildings to 1970s designs McDonald's was a public company but not rich. Having the money to grow and also remodel wasn't in the budget. However, the remodels, especially the addition of seating, brought huge sales increases, and management felt the operators could pay for some or all of the remodel. Adding drive-thrus brought a further sales boost, and the idea that Operators would pay for remodels became a permanent policy.

The idea that Owner/Operators should pay for "system image" was not discussed. It was all about sales increases, as were the original "Newman Deals".

So comparing corporate policy and motivations today to the first twenty years doesn't accomplish much; these are two different companies: the first, essentially a start-up, today an international money machine run by corporate raiders.