McDonald's.
Americans around the world love its food, but what is it really? Most people say it's a fast food company. The smart people say it's in the real estate business.
But the real secret of $MCD's success is something NOBODY is talking about... 1/npic.twitter.com/YeMR8zO1B6
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According to last night's movie, McDonald's was founded when Ray Kroc defrauded the McDonald brothers out of their family name and stole the burger business out from under them. They had a partnership to expand McDonald's BUT Croc figured out a way to cut them out!!! 2/npic.twitter.com/enp4ySNo3s
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When Kroc went to the bank a young pencil neck got nosy and found out Kroc was behind on his mortgage because the burger bucks weren't paying the bills. Pencil Neck turned into an infomercial and said hey Kroc there's money in real estate. Be a landlord and GET RICH! 3/npic.twitter.com/J1SsYky5rr
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Kroc thought it was a good idea and a way for him to get one over on the prudish McDonald brothers who refused to cut costs by letting Kroc make milkshakes out of Similac. He said hey McDonalds I'm the boss now and you are too beta to do shit about it and he was RIGHT! 4/n
$MCDpic.twitter.com/JANi82mv8H1 reply 1 retweet 1 likeShow this thread -
Kroc ended up paying off the Ronald McDonald brothers a few million dollars to go away and now whole empire was his. The only problem was his rich friends who opened franchises on a lark were more interested in their golf handicaps than management. WHAT TO DO??? 5/npic.twitter.com/kBE5HZgkxx
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Kroc found a Jewish guy who sold Bibles for a living and decided to try him as a franchisee. He discovered that wage slaves are submissive creatures by nature with no minds of their own, and would listen to him and follow instructions. The
$MCD growth engine was born. 6/npic.twitter.com/TUNi1hOcpE1 reply 1 retweet 0 likesShow this thread -
And so
$MCD created generations of sharecropper millionaires, and billions of $ of value for its owners. But how? Was it the burgers or the real estate? Neither! Or maybe, kinda both? It's hard to explain, but I'll give it my best shot as FinTwit's expert on The Founder. 7/npic.twitter.com/D4AZOYz9DJ1 reply 1 retweet 2 likesShow this thread -
According to the SEIU,
$MCD gouges its franchisees by charging above market rents, resulting in a ROI of between 10.5% and 19.3% on its real estate, 2-3x industry norms. That puts a finger on the "real estate" side of the scale, but we're not done! 8/nhttps://www.bloomberg.com/news/articles/2017-05-02/mcdonald-s-accused-by-union-of-inflating-franchisee-rents …1 reply 1 retweet 3 likesShow this thread -
You see, the world's premier expert on valuation, Aswath Damodaran, says that leases are really just a form of debt. And the major accounting bodies agree, now requiring operating lease commitments to be capitalized on the balance sheet as if they were a form of debt. 9/npic.twitter.com/RAmobTi71P
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You need at least $500,000 in liquid assets to be considered as a
$MCD franchisee. If leases are debt, then by signing up creditworthy franchisees incentivized by a big chunk of their savings being on the line,$MCD is creating its own high quality debt portfolio. 10/npic.twitter.com/y0p31hvtWz1 reply 2 retweets 8 likesShow this thread
By leasing its real estate to quality tenants, $MCD creates its own high quality debt portfolio.
Gouging those tenants with above market rent allegedly allows $MCD to earn an ROI of between 10.5% and 19.3%.
$MCD's real biz? Manufacturing subprime yields from prime assets. 11/11pic.twitter.com/q9XslWbGBS
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