McDonald's Corporation earns revenue as an investor in properties, a franchiser of restaurants, and an operator of restaurants. Approximately 15% of McDonald's restaurants are owned and operated by McDonald's Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary
franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants.
The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at
Hamburger University in Oak Brook, Illinois.
In other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments.
As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators.
According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. (According to a news piece on Fox News this
figure is one in ten.) The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and
apples. The selection of meats McDonald's uses varies with the culture of the host country.
Shareholder dividends
McDonald's has increased shareholder dividends for 25 consecutive years,[20] making it one of
the S&P 500 Dividend Aristocrats.[21][22]
Controversies
As a prominent example of the rapid globalization of the American fast food industry,
McDonald's is often the target of criticism for its menu, its expansion, and its business practices. The McLibel Trial, also known as McDonald's Restaurants v Morris & Steel, is an example of this criticism. In 1990, activists from a small group known as London Greenpeace (no
connection to the international group Greenpeace) distributed leaflets entitled What's wrong with
McDonald's?, criticizing its environmental, health, and labor record. The corporation wrote to
the group demanding they desist and apologize, and, when two of the activists refused to back down, sued them for libel in one of the longest cases in British civil law. A documentary film of the McLibel Trial has been shown in several countries.
Despite the objections of McDonald's, the term "McJob" was added to Merriam-Webster's Collegiate Dictionary in 2003.[23] The term was defined as "a low-paying job that requires little
skill and provides little opportunity for advancement".[24] In an open letter to Merriam-Webster,
Jim Cantalupo, former CEO of McDonald's, denounced the definition as a "slap in the face" to all restaurant employees, and stated that "a more appropriate definition of a 'McJob' might be 'teaches responsibility.'" Merriam-Webster responded that "we stand by the accuracy and appropriateness of our definition."[25]
In 1999, French anti-globalisation activist José Bové vandalized a half-built McDonald's to protest against the introduction of fast food in the region.[26]
In 2001, Eric Schlosser's book Fast Food Nation included criticism of the business practices of McDonald's. Among the critiques were allegations that McDonald's (along with other companies within the fast food industry) uses its political influence to increase its profits at the expense of people's health and the social conditions of its workers. The book also brought into question McDonald's advertisement techniques in which it targets children. While the book did mention other fast-food chains, it focused primarily on McDonald's.
McDonald's is the world's largest distributor of toys, which it includes with kids meals.[27] It has
been alleged that the use of popular toys encourages children to eat more McDonald's food, thereby contributing to many children's health problems, including a rise in obesity.[28]
In 2002, vegetarian groups, largely Hindu and Buddhist, successfully sued McDonald's for misrepresenting their French fries as vegetarian, when they contained beef broth.[29]
A midgetPETA activist dressed as a chicken argues with a manager of the Times Square McDonald's over the company's animal welfare standards.
People for the Ethical Treatment of Animals (PETA), continues to pressure McDonald's to change its animal welfare standards, in particular the method their suppliers use of slaughtering chickens.[30] Most processors in the United States shackle fully conscious birds upside down and
run them through an electrically charged water tub before slitting their throats.[31] PETA argues
that using gas to kill the birds (a method called "controlled atmosphere killing: or CAK) is less cruel.[32] Both CAK and "controlled atmosphere stunning" (CAS) are commonly used in Europe. [33]
Morgan Spurlock's 2004 documentary filmSuper Size Me said that McDonald's food was contributing to the epidemic of obesity in society, and that the company was failing to provide nutritional information about its food for its customers. Six weeks after the film premiered, McDonald's announced that it was eliminating the super size option, and was creating the adult
happy meal.
The soya that is fed to McDonald’s chickens is supplied by agricultural giant Cargill and comes directly from Brazil. Greenpeace alleges that not only is soya destroying the Amazon rain forest
in Brazil, but soya farmers are guilty of further crimes including slavery and the invasion of indigenous peoples’ lands. The allegation is that McDonald's, as a client of Cargill's, is complicit in these activities.[34]