McDonald's Corporation

Franchise royalties and rent, representing the majority of corporate revenues, are contractual over 20-year franchise terms and recur annually across ~45,000 locations globally. Revenue fell ~10% in FY2020 (COVID-driven restaurant closures) before recovering fully by FY2021, reflecting high but not unconditional forward visibility.

All of McDonald's revenue flows from a single QSR brand concept, with no meaningful secondary business line outside the core hamburger, chicken, and beverage menu. The company divested its non-McDonald's branded restaurant concepts years ago, leaving it more concentrated in product architecture than most mega-cap Consumer Cyclical peers.

The US contributed $10.83B (40.3%) of FY2025 revenues, with International Operated Markets (principally the UK, Germany, France, and Australia) at $13.63B and International Developmental Licensed markets (including Japan and LatAm) at $2.43B. Three meaningful geographic regions each contribute materially, and no single country dominates revenues.

The franchise model produces structural operating leverage at the corporate level: royalties and rent flow in on incremental franchise openings at near-zero marginal cost to McDonald's corporate. Operating income of $12.4B on $26.9B in revenue in FY2025 reflects a margin profile sustained as the system grew from roughly 40,000 to 45,356 restaurants across FY2021-FY2025.

Franchise royalties and rent are contractual (20-year agreements) and mission-critical to franchisees, representing a majority of McDonald's corporate revenues; company-operated restaurant revenues (roughly 40% of total) are fully transactional and tied to consumer foot traffic. The mixed revenue base reflects a gradual but incomplete transition toward a pure-play royalty model.