Wealth from Land: McDonald's is Actually a Real Estate Company Delayed by Burgers [Book Excerpt]

Why can't young people afford homes in prosperous cities? The answer lies in land. Ray Kroc, the founder of McDonald's, was originally a paper cup salesman. In 1954, he was captivated by the McDonald brothers' efficient cooking system and began franchising. However, the true transformation occurred in 1956 when CFO Harry Sonneborn joined. They established the 'Franchise Realty Corporation,' a business model that leased land and subleased it to franchisees. Today, rental income accounts for nearly 40% of McDonald's total revenue, exceeding the sales of burgers and drinks. As of 2023, the company's real estate assets are valued at $40 billion. McDonald's is one of the world's largest real estate owners, and the fact that burger sales are merely a front for its real estate business is a symbol of modern business models.