Margin. McDonald's average profit margin for the past five years has been 23%.

Sometimes they increase margin on price. But more often, they do it on labor and cost of goods. McDonalds takes no-skill workers, applies its systems, and spits out 5 billion cheeseburgers at five nines consistency. And then it buys in quantities that move world markets, unlike your locavore restaurant.

Five Guys will have lower margins, but still be 4-10x the margin of a one-off restaurant. Same for Cheesecake Factories, and all the Darden-owned restaurants.

sounds like to me that one-off restaurants' owners want to be artisans and craftsman, not running a business. It's like an engineer who values good code and high quality engineering, but is beaten out by massive outsourced labour that optimizes for business value.

Not really, it's just simple economies of scale. Large chains have a natural advantage in the restaurant business just like they have a natural advantage in any other field. A small restaurant simply cannot have as high a margin as McDonalds because they don't have the same bargaining power with their suppliers - they need to pay more for everything.

The silliest one I've been to was an upscale pizza joint that sold tiny $28 pizzas because they were "artisanal". They didn't make it 6 months. I walked in, looked at the portions and the price and walked out.

They have way better efficiency on goods and marketing. Your local mcdonalds isn’t advertising on TV. They pay franchise fees but its not a 1:1 cost to benefit. Depending on the size of the chain, they can also negotiate discounts by buying at predictable and high volumes.

Your local McDonalds sure is paying for TV advertising, in two ways. One is through franchise fees for national advertising, and the second is through co-op advertising in a region where franchisee's pool their advertising dollars.

The only reason fast-food franchises are better commercial tenants is because they're usually better capitalized than bespoke restaurants. (McDonalds franchises also don't worry about rent since the parent corporation owns all the land).

How do they “not worry about rent”? The local franchise pays rent to the parent company.

I think their point is that most McDonald's franchisees in the U.S. don't need to be concerned about sudden, drastic rent increases because they aren't beholden to a third-party commercial landlord - McDonald's is their landlord, and thus is unlikely to boot them out just to lease the space at a higher rate to e.g. Burger King.

That's interesting, and suggested by the movie. However I wonder how that works in Europe for inner city locations. Here in Germany both in large and small cities, I can't recall any that I can imagine being owned by McDonald's.

> I wonder how that works in Europe for inner city locations

I don't have any specific insight into the EU, but in the other global markets I'm familiar with (mostly China, Hong Kong, Singapore, and Japan) locations are either owned by McDonald's directly or franchised by large corporations that have significant bargaining power with (and sometimes are) landlords.

The China/HK franchise, for example, is operated by CITIC (a Chinese SOE) and Carlyle.

Yes, but the McDonald's Corporation has a vested interest in making sure that the rent is affordable for running a McDonald's franchise on. MDC isn't going to spike the rent to force a franchisee out of business in the hopes that somebody else comes along willing to pay the rent spike.

I have to point out that many if not most franchisees most own or lease the property independently of the parent company. Some parent companies own the property but most don't.

In the US, McDonalds Corporation owns all the land, and overall they own an incredible amount of the land and the buildings:

"The company owns about 45% of the land and 70% of the buildings at their 36,000+ locations (the rest is leased)."[1]

This article is from 2015, but I don't have any info that disputes it.

[1]https://blog.wallstreetsurvivor.com/2015/10/08/mcdonalds-bey...