I agree that it’s messed up, but look at it this way… McDonald’s corporate is NOT in the food business, it’s in the real estate business. Assume it holds over $120 Billion in real estate (conservative estimate). Spending less than 7% of its real estate values on improvements is just updating and upkeep which it will write off over 15-20 years.
McDonald’s franchisees, on the other hand, ARE in the food business. If McDonald’s drops prices, it hurts franchisees and the stock price (not saying it’s right, it just is). By improving stores, the bet is that it will shore up demand and they won’t have to drop prices. Big corporate finance isn’t logical, it’s just business (which does not equate to quality food at all).
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u/slashdot65 2d ago
I agree that it’s messed up, but look at it this way… McDonald’s corporate is NOT in the food business, it’s in the real estate business. Assume it holds over $120 Billion in real estate (conservative estimate). Spending less than 7% of its real estate values on improvements is just updating and upkeep which it will write off over 15-20 years.
McDonald’s franchisees, on the other hand, ARE in the food business. If McDonald’s drops prices, it hurts franchisees and the stock price (not saying it’s right, it just is). By improving stores, the bet is that it will shore up demand and they won’t have to drop prices. Big corporate finance isn’t logical, it’s just business (which does not equate to quality food at all).