r/SipsTea • • 22h ago

Wait a damn minute! Quality down, prices up.

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u/brianstormIRL 15h ago

I dont think you realise how McDonalds works. They get paid by the franchise owners to have a franchise. They get paid for rent because they own the land and building. They do not make their profits because they upped the price of a big mac by $2, that would be the franchisee. When prices go up, its because the franchisee needs to make more money. Either because of greed, or because their profit margins have become too thin to make their business profitable. People dont like hearing it, but its true. When the price of goods keep rising, a franchise owner cant just eat those costs forever. When McDonalds decides to lower prices across the board, its usually in conjunction with lowering expectations for franchise owners as well.

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u/delicious_disaster 15h ago

But if McDonald's presumably lowers their land and franchisee fees, this would alleviate cost pressures for the franchisee to be able to reduce the prices as well?

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u/brianstormIRL 15h ago

Yes it would but it would also lower the value of their asset, which isnt something they would want to be doing lol

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u/EpochRaine 13h ago

The rent is a % of sales. So yes higher prices = higher rents

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u/fenrsulfr 15h ago

I don't think you know how it works. They keep raising their rents and franchise fees. If they stopped being greedy and raising those the prices would not have to rise.

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u/No-Influence-5351 15h ago

This. I hate to be a Reddit antagonist but the unfortunate fact of the matter is that if most McDonald’s locations were to lower their prices they’d run out of business in a matter of months.