What Is a McDonald’s Franchise’s Profit?
An average McDonald’s franchise makes between $500,000 and $1 million in profits per year, according to McDonald’s Franchise Disclosure Document. For restaurants open at least 1 year in the United States, average total revenues are $2.6 million.
The U.S. restaurant franchise with the highest sales is Chick-fil-A. Its restaurants average gross revenues of $3.1 million per year. McDonald’s is second with $2.6 million in annual single-store sales. Jason’s Deli comes in third with an average of $2.55 million in sales per store. Subway has more locations than McDonald’s, but its stores earn an average of only $481,000 in revenue each year.
Profit margins are typically low for restaurants in general, and especially for restaurants owned by individual franchisees. The average profit margin for the restaurant industry overall has dropped from 3.2 percent to 2.4 percent in the past 5 years. The average franchised restaurant location makes a profit of less than $50,000 per year. Opening a franchised restaurant with an established brand sometimes costs as much as $500,000.
McDonald’s is the second largest restaurant chain in the United States and is highly profitable on a corporate level. The company earns revenues of more than $27 billion and profits of $5.5 billion, with a profit margin of almost 20 percent. The profit margin for large U.S. companies averages about 8.7 percent.