McDonald's

Overview

McDonald’s is a US-founded quick-service restaurant business best known for burgers, fries, breakfast products and its Golden Arches identity. Headquartered in Chicago, Illinois, it serves customers through a combination of franchised and company-operated restaurants. Its core proposition is consistency: familiar products, relatively quick service and accessible prices, with menus adapted to local tastes and trading conditions.

Franchising is central to the company rather than an additional distribution channel. Around 95% of its restaurants were franchised at the end of 2024. The corporate business develops the brand, sets operating standards and oversees the system, while franchisees invest in restaurants and manage day-to-day operations. Property ownership and leasing also play an important role in its economics.

History and growth

Brothers Richard and Maurice McDonald opened their original restaurant in San Bernardino, California, in 1940. In 1948, they reorganised it around a simplified menu and a production process designed to deliver food quickly. That approach provided the operational foundation for the restaurant system that followed.

Ray Kroc, then a supplier of milkshake equipment, became involved in the 1950s and opened a McDonald’s restaurant in Des Plaines, Illinois, in 1955. This marked the beginning of the business that became the modern McDonald’s Corporation. Kroc acquired the brothers’ rights to the business in 1961.

Expansion across the United States was followed by international growth, with restaurants opening in Canada and Puerto Rico in 1967. Subsequent decades brought drive-through development, breakfast, major product launches and increasingly sophisticated supply chains. More recently, ordering kiosks, mobile applications, loyalty programmes and delivery have extended the business beyond the traditional counter transaction.

Global footprint

McDonald’s had around 45,400 restaurants in more than 100 countries at the end of 2025. These figures describe the worldwide system, including both franchised and company-operated outlets, rather than restaurants owned directly by the parent company. The United States remains its largest individual market by restaurant count.

The international network operates through several ownership arrangements, reflecting differences in market maturity, capital requirements and local business structures. Some markets have conventional franchisees; others are served by developmental licensees or affiliates. A large national network therefore does not necessarily mean that individual franchises are available to applicants in that country.

Local adaptation sits alongside common brand standards. Menu variations reflect dietary preferences, religious requirements and purchasing habits, while restaurant formats respond to urban density and car use. High-street sites, shopping-centre restaurants and drive-through locations can have materially different staffing needs, occupancy costs and sales patterns.

How the franchise model works

Under a conventional franchise arrangement, McDonald’s generally owns the land and building or secures a long-term lease. The franchisee typically invests in equipment, signs, seating and décor. Payments to McDonald’s generally include rent and royalties linked to sales, alongside an initial franchise fee. Conventional franchise agreements typically run for 20 years, although local terms and individual transactions can differ.

Developmental licensing uses a different allocation of responsibility. The licensee generally provides the capital for the business, including property interests, and develops and operates restaurants within an agreed territory. McDonald’s receives royalties and generally initial fees. Applicants should distinguish these arrangements from an opportunity to operate a single conventional restaurant.

Franchisees must follow prescribed standards covering food safety, preparation, service, restaurant appearance and approved sourcing. They normally employ and manage their own restaurant teams. McDonald’s provides training and operating support, but the model requires active business leadership rather than passive ownership. Advertising, technology and restaurant improvement obligations also form part of the relationship.

Investment and requirements

There is no single worldwide price for a McDonald’s franchise. Costs depend on the country, restaurant format and whether an applicant is buying an existing operation or opening a new restaurant. The price of an established business can reflect its trading record and remaining contractual term, making comparisons with new-opening costs potentially misleading.

McDonald’s has publicly quoted an initial franchise fee of US$45,000 for a conventional US franchise. That fee is only one component of the commitment, not the total purchase or development cost. Equipment, opening expenditure, working capital and any acquisition price must also be considered, together with ongoing rent, royalties and other system charges.

Financial eligibility and owner-operator requirements vary by market. Selection usually involves an assessment of financial resources, management capability and willingness to complete extensive training. Prospective franchisees should request the current franchise disclosure documents, where applicable, and the relevant local investment schedule. Published figures from one country should not be treated as an offer or eligibility benchmark elsewhere.

What franchisees should consider

The advantages of system scale do not remove restaurant-level risks. Labour availability, wage rates, food costs, utilities and local competition all affect operating performance. Restaurants may trade for long hours and require managers capable of maintaining speed, accuracy and hygiene through busy periods. A recognised brand does not guarantee the profitability of an individual site.

Applicants should examine the required timetable for refurbishment, equipment replacement and technology upgrades, as well as the division of responsibilities for the premises. Delivery can increase reach but changes order handling and introduces additional costs. The relationship also involves limited freedom over products, suppliers and presentation: entrepreneurial responsibility operates within a closely specified system.

Competitive landscape

McDonald’s competes with Burger King and Wendy’s in burgers, alongside broader quick-service operators such as KFC, Subway and Taco Bell. Competition extends beyond menu categories to breakfast, coffee, value offers, delivery and convenient locations. Supermarkets, convenience stores and independent takeaway businesses also compete for customers’ spending.

Its network, brand recognition and purchasing scale are substantial competitive assets. However, rivals can challenge it through product specialisation, pricing or stronger local positions. For franchisees, the relevant competitive picture is often the immediate catchment area rather than the worldwide standing of competing brands.

Outlook

McDonald’s growth strategy has emphasised restaurant expansion, digital customer relationships and its established strengths in core menu products, delivery and drive-through service. The commercial question is how effectively those priorities translate into repeat visits and sustainable restaurant economics across different markets.

For prospective operators, the opportunity combines a mature operating system with substantial financial and managerial obligations. Local availability, current contract terms and the economics of the specific restaurant matter more than global scale alone. Continued investment in convenience and efficiency will remain important as customer expectations and operating costs evolve.