McDonald's Owns the Land Under 45,356 Restaurants

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In 1956, a former Tastee-Freez executive named Harry Sonneborn sat down with Ray Kroc and told him something he didn't want to hear.

"We are not technically in the food business. We are in the real estate business."

Kroc was nearly broke. His franchise royalties — a thin cut of each store's sales — barely covered his bills. He was selling hamburgers. He was losing money doing it.

Sonneborn laid out a different path. Stop chasing pennies on patties. Start owning the dirt underneath each restaurant. Lease it back to the operators. Let them flip the burgers. You collect the rent.

I pulled into a McDonald's drive-through last month. The line wrapped around the building. I paid six dollars for a Big Mac at the window and drove off eating it one-handed. Only later did I think about where that money really went. Not to the crew behind the counter. Not to the franchise owner who paid for the grill. The biggest slice went to the landlord.

The landlord is McDonald's.

You've probably eaten at a McDonald's this year. You think of it as a restaurant company. It is not. It is one of the largest commercial landlords on Earth — a real estate operation that smells like french fries.

Ray Kroc opened his first McDonald's in Des Plaines, Illinois, in April 1955. He was 52. He'd spent his career selling milkshake mixers. The McDonald brothers had built a fast burger stand in San Bernardino. Kroc wanted to take it national. But Sonneborn — his first financial chief — taught him the real trick. Buy the land. Build the store. Lease it to the operator. In 1956, Kroc set up Franchise Realty Corporation.

Today, McDonald's has 45,356 restaurants across more than 100 countries. About 95% are franchised — run by independent operators who pay McDonald's rent and royalties every month. In fiscal 2025, those franchised restaurants sent $16.5 billion to the parent company. Total revenue hit $26.9 billion. Systemwide sales — the total rung up at every register on the planet — reached $139.4 billion. McDonald's keeps a fraction. But it keeps the most profitable fraction. Operating margin last year: 46.1%. That is not a restaurant margin. That is a landlord's margin.

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Franchise agreements run 20 years. You sign a lease, pour your savings into equipment and build-out, hire a crew, and open the doors. Walking away means losing everything — the upfront cost, the location, the brand. So you don't. You renew. And every month, the rent check arrives in the same place.

Here is the part I find most striking. Franchisees pay McDonald's a base rent plus a percentage of gross sales. When menu prices go up — and they have, sharply — the rent rises with them. The average Big Mac went from $4.39 in 2019 to nearly $6 by 2025. Customers complained. Politicians held hearings. And then customers ordered anyway. McDonald's operating margin climbed from 45.2% in 2024 to 46.1% in 2025. The landlord's cut got bigger, not smaller.

The moment that built this empire is worth slowing down for.

In 1956, Kroc was desperate. He had a handful of franchised restaurants. The royalty checks were paper-thin. He owed money. He could not figure out how to scale.

Sonneborn sat him down and explained a simple idea. McDonald's would not just sell franchise licenses. It would lease the real estate to the operator. The company would find the land, sign the master lease or buy the property outright, build the restaurant, and rent it to the franchisee at a markup. The spread between what McDonald's paid and what the franchisee paid — that was the real margin.

Sonneborn later put it plainly: "The only reason we sell fifteen-cent hamburgers is because they are the greatest producer of revenue, from which our tenants can pay us our rent."

What I keep coming back to is how the flywheel tightens each year. McDonald's pours money into digital ordering and its loyalty program — now 210 million active users across 70 markets. Those tools push more transactions through each location. Loyalty sales hit nearly $37 billion in 2025. Higher sales per restaurant mean higher percentage-based rent for McDonald's — without the company spending a dime on ingredients, labor, or grease traps.

WHY THIS WORKS

McDonald's carries its real estate on the balance sheet at $25.3 billion — historical cost minus decades of depreciation. Macquarie Asset Management estimates the market value at closer to $120 billion. If the company spun those properties into a REIT, it would rank among the largest landlords on any exchange. It never will. The real estate is the leverage.