McDonald’s says franchisees are making more money than ever before

  • McDonald’s franchise restaurants in the United States have achieved record average cash flow, it said Thursday.
  • Average cash flow exceeded $500,000 per unit, an increase of $125,000 over the past year alone.
  • McDonald’s total annual revenue reached $23.2 billion due to higher prices and larger orders.

McDonald’s franchise restaurants in the United States hit record average cash flow amid increased sales for the burger chain, it said Thursday.

Cash flow from its U.S. franchisees has averaged more than $500,000 per unit, Chief Financial Officer Kevin Ozan said during McDonald’s fourth-quarter earnings call.

That represents 50% growth over the past three years and an increase of $125,000 in the past year alone, Ozan said.

It’s not just US franchisees who have seen their cash flow soar. McDonald’s CEO Christopher Kempczinski said franchisee cash flow was “reaching unprecedented heights in most of our major markets”, including the UK, Canada, Germany and Japan.

Total company revenue reached $23.2 billion in the year to Dec. 31, a 21% year-over-year increase, with a slightly higher increase in sales in franchise restaurants than in company-owned ones.

Part of the sales boost came from a growth in average order size and menu price increases, which Ozan says ended up around 6% on the year.

“With average unit volumes and strong restaurant cash flow, the company and our franchisees are well positioned to withstand the pressures ahead,” Kempczinski said.

That includes expectations that U.S. food and paper costs will rise about 8% in 2022, or double the rate of inflation in 2021, Ozan said.

Like other restaurant chains, McDonald’s has been hit by a combination of soaring ingredient prices and rising staffing costs in 2021 as a labor shortage has taken its toll on both global supply chain and restaurant staffing capacity.

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