McDonald’s Ownership Leaves Black Franchisees Behind
- Black McDonald’s franchisees net $68K less a month compared to their counterparts
- In 2008 there were 304 black McDonald’s franchisees. In 2017 there were 222
Owning a McDonald’s (MCD -0.44%) franchise can be lucrative, as the average restaurant generates nearly $2.7 million in annual sales, but black owners aren’t reaping these rewards. Black McDonald’s franchise owners are at a disadvantage, because on average they own stores that net $68,000 less a month than its overall franchisee average. Even though the Big Mac maker claims diversity among its top priorities, the trajectory of African American owners is steadily moving backwards.
Why This Matters: Herein lies the problem. Black-owned McDonald’s franchises are much more likely to be located in places where sales are lower and costs like security are higher. The company has notoriously strict criteria for its fast-food restaurants and requires potential franchisees to have liquid assets of at least $500,000. Startup costs average between $1 million and $2.2 million, 40% of which must be paid with cash and other non-borrowed resources. McDonald’s charges a $45,000 franchise fee in addition to an ongoing monthly service fee. Franchisees must also pay rent to the company.
Black owned McDonald’s franchises are much more likely to be located in places where sales are lower and costs like security are higher