McDonald’s absolutely has room to grow, but the real estate process is holding the brand back. The real estate team isn’t out in the field with operators, they’re waiting for brokers to bring them the easy, obvious sites. That approach keeps McDonald’s out of the tougher, high-density markets where we should be expanding.
Using the same old IRR formula on every deal guarantees the rent ends up so high that the operator can’t make money. Until the real estate team gets back out there, works with franchisees, and thinks outside the box, we’re going to keep missing great sites and approving bad ones.
The growth potential is still a big question. Let's meet back here on Thanksgiving 2026 and evaluate how McDonald's has done in building 100s of new USA stores. Evaluation based on both opening volumes and cannibalization of the marketplace. As for the real estate process, you couldn't be more correct. Depending on brokers is poison In site location, work.
Being in an operations job during the McDonald's growth years, one couldn't avoid being exposed to the real estate side of the business. It even meant traveling with the McDonald's real estate people or maybe sharing one of the McDonald's helicopters. So I learned from some of the most experienced. And in subsequent lives, I've had a lot of social contact with commercial real estate brokers, some of whom are good friends (unless they read this). But brokers are terrible at picking QSR locations. They only look at car counts and rooftops. I've been presented with McDonald's sites one mile apart in the same trade area, on the same street, traffic going in the same direction. Few people in this world know what it takes to make up a successful McDonald's location, brokers among them.
Brokers have a role, but they should have nothing to do with making decisions or developing a marketplace.
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3 comments:
Jonathan isn't saying it (yet) - I'm the one saying there are too many restaurants.
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McDonald’s absolutely has room to grow, but the real estate process is holding the brand back. The real estate team isn’t out in the field with operators, they’re waiting for brokers to bring them the easy, obvious sites. That approach keeps McDonald’s out of the tougher, high-density markets where we should be expanding.
Using the same old IRR formula on every deal guarantees the rent ends up so high that the operator can’t make money. Until the real estate team gets back out there, works with franchisees, and thinks outside the box, we’re going to keep missing great sites and approving bad ones.
The growth potential is still a big question. Let's meet back here on Thanksgiving 2026 and evaluate how McDonald's has done in building 100s of new USA stores. Evaluation based on both opening volumes and cannibalization of the marketplace.
As for the real estate process, you couldn't be more correct. Depending on brokers is poison In site location, work.
Being in an operations job during the McDonald's growth years, one couldn't avoid being exposed to the real estate side of the business. It even meant traveling with the McDonald's real estate people or maybe sharing one of the McDonald's helicopters. So I learned from some of the most experienced.
And in subsequent lives, I've had a lot of social contact with commercial real estate brokers, some of whom are good friends (unless they read this).
But brokers are terrible at picking QSR locations. They only look at car counts and rooftops. I've been presented with McDonald's sites one mile apart in the same trade area, on the same street, traffic going in the same direction.
Few people in this world know what it takes to make up a successful McDonald's location, brokers among them.
Brokers have a role, but they should have nothing to do with making decisions or developing a marketplace.
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