How to open a McDonald's in your city: how much does it cost and what is needed for this?

Brand history

The first restaurant was opened by the McDonald brothers in 1940 in San Francisco. And in 1954, Ray Kroc received from the brothers the right to act as the exclusive franchising agent. A year later he opened his first restaurant, and already in 1959 the number of restaurants opened by Kroc exceeded one hundred. After that, he bought all rights to the company from the McDonald brothers for $2.7 million.

A company logo that billions are familiar with

The brand developed dynamically and placed great emphasis on advertising, thanks to which restaurants with the letter “M” in the logo became one of the most recognizable in the early 1960s. By the end of that decade, more than 1,000 locations had already been opened around the world.

Now McDonald's ranks first in the world in the franchising business. In the US, 80% of McDonald's outlets are franchised, while in Europe the figure is about 50%.

McDonald's franchise - fast food restaurant

Company No. 1 on the franchise list

Franchising as one of the important factors has made McDonald's the No. 1 company in the world. In Times Maqazine's list of top two hundred franchises, McDonald's franchising ranks first. The date of formation of the franchise network of the American symbol of fast food is considered to be 1955. Franchisee is an open joint stock company with 885 employees. In the USA, more than 80% of the chain's restaurants operate under McDonald's franchises, in Europe - approximately 50%. The company's strategy is aimed at opening its establishments wherever customers need them.

In Russia, the first McDonald's restaurant appeared in 1990 in Moscow on Pushkinskaya Square. The first time after the opening, the queues at the new catering establishment were kilometer long. Just 20 years later, there were 245 fast food restaurants in Russia with the recognizable letter “M” on the sign, but even today the McDonald’s restaurant on Pushkinskaya is the most popular chain establishment in the world in terms of attendance. The percentage of Russian clients compared to other countries is quite high. According to the latest data, in Russia there are 314 enterprises of the famous chain in 85 cities, and new ones are constantly opening.

McDonald's franchise: basic conditions

Franchising has been the main development model for large food service corporations for many years. As for McDonald's in Russia, the situation is significantly different from other countries, and for 20 years the company opened its restaurants without this type of partnership with local businesses.

• initial capital – $950 thousand – $1.8 million;
• royalties (monthly payments) – 12.5%+;
• duration of the franchise agreement is 20 years with the possibility of renewal;
• McDonald's franchise cost – $45,000;
• payback period - 1 year;
• training – on-site training for 1 week every three months;
• local training – 12 – 24 months;
• support: news, meetings, toll-free telephone line, Internet, information about the opening, security, rating system, advertising (television, outdoor, regional), marketing support.

Despite the imperfection of the legislation, which does not allow legally fixing all the conditions that the chain dictates to partners, quite recently the opportunity to buy a McDonald's franchise in Russia became available. Its price is quite high, depends on many factors, for example, the city where the restaurant is planned to open, and is in the range of 500 thousand - 1.2 million dollars

The opportunity to buy a McDonald's franchise in Russia was not always available. Previously, as a franchise, you could only open a restaurant of a competing brand with prospects for active development. That is why today you can become a member of the World Wide Web. However, there are also restrictions by which franchisors select new partners. Mainly, you must have strong leadership skills, as well as experience in running a successful business. In his business, a businessman must establish himself as a talented manager and an astute financier.

The main features of this business are the following:

• The franchisee personally undertakes to take part in all processes of his establishment, from management decisions to food preparation. This is necessary for a stable quality level in providing all services to the client.
• All franchisees take part in charitable activities of the McDonalds chain. This includes participation in network-wide programs such as supporting local youth soccer teams, helping disabled children, and much more.
• The terms of purchasing a franchise business provide you with a convenient payment method. The first payment will be only 25% of the total cost, and training in aspects of running a business is paid in full at the start of classes, and is fully refunded upon completion of training.

You can learn more about this unusual and interesting business at the open day, which is held in all branches of the restaurant chain. Such events are attended by company representatives who will be happy to share with you the most detailed and up-to-date information.

The McDonald's fast food restaurant chain offers you the broadest development prospects. This applies not only to the establishment itself, but also to the personal qualities of the franchisee as a businessman, manager and individual. Each new franchise owner takes an active part in the events of the entire extended family.

From now on, entrepreneurs with substantial assets can submit their proposals for cooperation to the company. Details and conditions of the McDonald's franchise, in particular, its acquisition in a specific region, for example, St. Petersburg, can be found on the official website from the company manager, let's consider the general

Features of the McDonald's partnership in Russia

It is unlikely that a modest restaurateur from a provincial town will realistically discover a gold mine under the two golden arches on the sign. Significant funds are needed not only for purchasing a franchise, but also for arranging the premises, purchasing equipment and products, and training staff. For example, in Moscow and St. Petersburg, a reputable company has become a partner of McDonald's, opening fast food restaurants at railway and air terminals.

Financial expenses

In addition to the cost of a McDonald's franchise, in Russia there are also additional financial requirements for potential partners. To receive an installment plan, you must have an initial payment: when purchasing a new restaurant, it is 40% of the total cost, while purchasing an existing restaurant is limited to a contribution of 25% of the total cost.

Moreover, an advance payment from borrowed funds is not considered, only one’s own finances - cash, bonds, debt obligations, shares in a business, real estate (except where the partner lives), securities. For the remaining amount, you can get a loan or installment plan for up to 7 years. The franchisor itself does not issue loans, although it has the lowest interest rates in the business.

To open a franchise, you need at least $300,000 of your own funds as an advance. The company encourages individuals with financial capabilities who are prepared to purchase additional businesses - a chain of restaurants.

McDonald's in Russia

The first McDuck in Russia was first opened in 1990. Then, on January 31, more than 30 thousand visitors were served per day - this is the company’s absolute record for service on the first working day.

Currently there are more than 500 outlets in Russia, most of which operate under McDonald's franchises. The main advantage of cooperation with the company is brand recognition, no need for advertising and a quick return on investment.

The queue on the opening day of the first McDuck in Moscow

McDonald's franchise - features

Let's look at the main features and requirements:

• The franchisee must be involved in the operation of the restaurant, including food preparation.
• Participation in brand charity. This includes supporting local football teams, helping children with special needs, and carrying out activities to preserve the environment.

You also need to keep in mind: McDonald's is interested in providing a franchise not in any particular city, but in a selected territory. This may include different cities with chain restaurants already open, and franchisees may be asked to take over these restaurants.

How to open a McDonald's franchise in Russia

To become a McDonald's partner, an entrepreneur needs to go to the company's official website in Russia and fill out a short form indicating:

• marital status;
• citizenship;
• length of residence in the region;
• education;
• material opportunities;
• experience.

Preference is given to entrepreneurs with a budget of $5-10 million* and above, since such people are able to open several points at once in the same or different regions.

If the franchisee’s candidacy suits the company’s representatives, they will contact the applicant to discuss the details of cooperation.

This is what the exterior of a large McDonald's in Russia looks like

How much does a McDonald's franchise cost in Russia?

The cost of a McDonald's franchise in Russia depends on certain conditions: location of the restaurant, level of technical equipment, decor, size of the premises, etc.

A McDonald's franchise for an existing restaurant costs from $500 thousand to $1.2 million, depending on the above factors.

Purchasing the rights to open a new establishment will cost an entrepreneur from Russia $45 thousand + the amount for the purchase of premises, technical equipment, etc.

Current McDonald's

The first option is to purchase an existing business. But the fact is that no one will sell the existing McDonald's. To obtain a license, you need to go to America or Canada. A permit to open a McDonald's costs $45,000.

You will have to spend about $1.5 million to purchase the restaurant. Since McDonald's is currently suffering losses, the company's management is very picky about the sale of its restaurants. It may happen that the establishment you have chosen will be given to another applicant. Then, don’t despair, but open some interesting outdoor themed restaurant.

If you manage to agree on the purchase of a restaurant, you will have to immediately pay 25% of the total cost for it. In addition, this money cannot be credited. They must be secured by income-producing real estate or an existing business. Therefore, before opening a McDonald's, you need to collect large start-up capital.

Is it possible to buy a franchise in installments?

If necessary, you can get a franchise in installments. Its maximum period should not exceed 7 years. However, for this you will need to make an initial contribution, the amount of which is from 40% of the total cost of opening a new fast food restaurant and at least 25% if the entrepreneur buys out an already existing and functioning outlet.

The company gives preference to paying customers

You can pay the down payment only with your own funds (not borrowed), cash, securities, bonds, real estate, etc. The company also encourages those entrepreneurs who are ready to buy several official brand outlets at once.

Only those entrepreneurs whose finances exceed 25-40% of its cost will be able to obtain a franchise. If a person does not have enough money of his own, the company may refuse to issue rights to open a point.

Requirements for franchisees

The company is interested in its partners developing quickly and actively, therefore the following requirements are imposed on McDuck's future colleagues:

• Having sufficient experience. The franchisee must have some experience in running one or more businesses.
• Active growth. If a partner is constantly developing, then the performance of the company itself grows along with him.
• Ability to competently manage a business. In-house experience managing restaurant operations is required.
• Knowing your customers and employees. This also includes the ability to competently manage employees, motivate staff and set specific goals for the team to meet service standards.
• Good credit history. A McDonald's franchise will not be given to an entrepreneur with a bad or insufficiently clean credit history.
• Business plan. Availability of a business development plan or skills to draw it up.
• Participation in events. After concluding the agreement, the franchisee undertakes to participate in all events and promotions held by the company.

If the franchisee does not meet at least one of these criteria, then he may be denied partnership.

Features of working at McDonald's

Working under the brand of this company requires participation in the social life of the community. A restaurant owner should be interested in:

1. Company policy;
2. Take part in various actions, for example, to protect the environment;
3. Support young football players;
4. Organize competitions and cultural events.

This increases the popularity of McDonald's. In this way, it commands respect from people and attracts the attention of customers.

Franchisees are approved as the owner of their own restaurant after several interviews. The company must be sure that this type of business is suitable for it. McDonald's only accepts selected candidates who have management skills and are accomplished individuals. Knowing how much it costs to open a McDonald's franchise, and this is not a cheap pleasure, many businessmen still decide to take this step and receive a good income.

Geographical requirements

The area of ​​the future restaurant should be located in the front part of the building, which has access to central city streets, highways, metro or the intersection of pedestrian and traffic flows on the road. The point can also be located in shopping and entertainment centers (it is recommended to consider corner objects).

An example of an establishment located in a shopping center

How much will the franchisor need to pay?

McDonald's franchising regulations clearly define the amounts of payments to the company's account for the duration of the received franchise:

• Price of the service. These are regular payments depending on sales performance indicators, but not less than 4% of turnover.
• Rent. Rent, calculated from the general monthly indicators of the restaurant, if the premises are taken for temporary use.
• Contribution to advertising. Entrepreneurs must invest 4.5% of their profits in advertising campaigns.

In addition, the franchisee will have to take a training course in running a restaurant business for $10 thousand. Leading specialists will teach the future partner all the basics and the best marketing techniques that will contribute to the development of the enterprise. As soon as the entrepreneur successfully completes the course, company representatives will provide him with a list of selling points recommended for opening a restaurant.

Payback period

The main feature of the McDuck franchise is its high profitability. Investments in starting an enterprise will be recouped within a year with a good sales volume. Large restaurants trade up to 400-500 thousand rubles per day, and per year the revenue received can reach 150 million or more with an initial cost of 60 million rubles. for the opening of the establishment.

If you subtract tax deductions, the amount sent to the franchisor and other costs from the revenue, the franchise owner will receive a 100% return on business within a year. The above figures are relative, as much depends on the location and size of the restaurant.

How much can you earn

It is impossible to name the exact amount of profit that a McDonald's franchisee receives for several reasons. Firstly, the corporation does not disclose this data for Russia and, secondly, this is extremely difficult to do for technical reasons. The profitability of each individual establishment is different due to many factors. And in one case, a restaurant can recoup all its expenses within the first year, while in another it will take 7-9 years.

For example: two McDonald's outlets are located in the same city, but in different places. The first one is located in the center next to the shopping center, where all the city’s youth actively relax. The second one is also in the center, but on the territory of a shopping center, where there are few visitors. The occupancy and sales of these two locations will be very different.

However, it should be noted that in Russia there has not yet been a single episode recorded when a McDonald's restaurant closed due to the fact that the business went bankrupt and was not making a profit.

Advantages and disadvantages of a franchise

Experts highlight several advantages of buying such a franchise:

• Recognition. McDonald's is the most famous and widespread chain of catering restaurants, so there is no need for advertising.
• High income. Many entrepreneurs recoup their costs within 1-2 years after opening the establishment.
• Training. The owner hires the workers, and the training of the team falls on the shoulders of the company.
• Customer focus. This restaurant chain pays special attention to customer preferences, which is why people choose McDuck.
• Help. At any time, a partner can turn to the franchisor for help and receive the necessary advice. In addition, the owner does not have to look for product suppliers, since the company provides a well-coordinated business model.

A good atmosphere in restaurants serves as the company’s calling card.
But there are also disadvantages that are worth mentioning:

• High requirements. To obtain franchisee status, an entrepreneur needs to meet a number of requirements, which are higher than in most other companies in a similar field.
• Personnel turnover. Most of the employees of this restaurant chain are students and young people looking for part-time work. Therefore, at the enterprise, some personnel are constantly replacing others. And it takes time to train new workers.
• High franchise cost. Compared to analogues, the franchise of this network costs significantly more.

But, despite serious shortcomings, the demand for the Macdonald franchise is off the charts: every 4 hours, one restaurant of this chain opens in the world.

Let's sum it up

The McDonald's franchise attracts many as the brand is extremely popular. There are more than 300 restaurants in Russia alone. The fact is that competing restaurants open much faster, so you can hope that after a while there will be no big problems with buying a franchise. The company's management will offer more favorable conditions and affordable prices.

In one month the restaurant sells:

• 2 million drinks;
• 2.5 million servings of French fries;
• 1.1 million milkshakes;
• 1.15 million sandwiches;
• 950 thousand pies.

All dishes are prepared only from high-quality products that meet established standards.
Independent experts carry out strict control at all stages of production. When manufacturing products, all rules and sanitary standards are strictly observed. McDonald's does not want to give in to competitors, so the network of restaurants in our country will constantly expand. Investors should take a close look at this business so as not to miss the opportunity to purchase a franchise. It doesn’t matter which McDonald’s opens, in any case, it does not need advertising, since visitors are drawn to it like a magnet. The main goal of the company is complete satisfaction of customer needs.
All McDonald's initiatives meet this criterion. If you liked the idea of ​​a food business, then we recommend you read also about how to open a kebab shop. This is certainly not McDonald's, but it is also a pretty good way to earn money. Good luck.

Calculation of investments for opening a McDonald's restaurant in some Russian cities

As mentioned earlier, if they have a starting budget of 25-40% of the franchise cost, entrepreneurs will be able to open a McDuck by paying the remaining amount in installments. The franchisor himself is looking for cooperation with businessmen who have a budget for starting an enterprise of $1 million or more: this amount is enough to open a McDonald's from scratch, pay for technical equipment and other costs in most Russian countries.

The launch of McDuck in Moscow and St. Petersburg can grow to $2 million, depending on the area of ​​the premises and its location relative to the city center.

From this table it can be seen that for $1-1.2 million you can open a large McDonald's in Krasnodar, Rostov and other cities with a population of over a million.
Price tags in Moscow and St. Petersburg will be noticeably higher, but the remaining amount can be taken out in installments. Opening a McDonald's is a profitable investment that will pay off within 1-2 years of the enterprise's operation. Such profitability indicators are due to the high cost of the franchise and stringent requirements for future franchisees.

*Prices are current as of December 2020

What risks are possible when buying a franchise?

In Russian cities where there have never been McDonald's restaurants, an entrepreneur may face a number of risks:

• manifestation of a biased attitude towards products;
• crisis economic phenomena in the city, country;
• increased costs of franchising and starting a business;
• protracted period of training, registration of permits;
• constant staff turnover due to difficult working conditions and low pay.

Important to remember! The listed disadvantages are offset by a significant advantage - the quick payback of the project. The popular McDonalds brand is as attractive to visitors as it was 20 years ago, so the price for the franchise is justified.