In Canada, for an average franchisee, profit runs about 25% of total sandwich pricing. ie a big Mac costs $4, after all labour and materials. $1 is gross profit, $3 to make sandwich. Markup on dollar menu ($1.39) items is substantially less with the hope that you will be purchasing a pop and fries. Can’t remember the markup on those but I think I remember a pop costing between $.09-$.15. That may have changed in the last decade.
However, franchisee’s then owe something like 7% of TOTAL sales to McDonald’s head office for rent and advertising, among other things. Which seems like a lot, but also gets you one of the best and most consistent delivery systems of any restaurant. (And now I feel like a shill)
Source: family members once owned a McDonalds
“Worked at a McDonald’s as a manager for a long time and I am good friends with an owner of 5 restaurants. He tells me the biggest profit margins are from the sale of coffees and fountain drinks. A small coffee at $1.39 for example cost $0.015 for the cup and $0.05 for the coffee itself. Add the cost of labor etc etc, each small coffee brings at least $1 straight to his pocket after all expenses and all income federal taxes. Must be nice.
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