Home / Business and Economy / Franchising Shields McDonald's from Industry Slump
Franchising Shields McDonald's from Industry Slump
11 Nov
Summary
- McDonald's revenue and sales rose despite industry struggles
- Franchising model provides stable income stream for McDonald's
- Customers may trade down to McDonald's in tough economy
As of November 11th, 2025, the restaurant industry is facing significant struggles, with chains like Chipotle and Starbucks reporting falling sales growth. Customers are increasingly balking at rising prices and perceiving less satisfying experiences. However, McDonald's appears to be weathering the storm.
In the first three quarters of 2025, McDonald's earned almost $20 billion in revenue, a 2% increase compared to the same period in 2024. This included a 3% yearly jump in Q3. The company was also able to limit cost and expense growth to 2%, leading to a 3% annual rise in net income to $6.4 billion.
The key to McDonald's resilience lies in its business model. Unlike competitors that rely on company-owned locations, around 95% of McDonald's restaurants are franchises. This means the company earns revenue primarily from franchise fees, rents, and royalties, providing a relatively stable income stream regardless of the broader economic environment.
Additionally, some customers may trade down to McDonald's in a challenging climate, making the chain more recession-resistant than others. While the industry faces significant struggles, the growth of McDonald's stock is unlikely to be stopped by the current headwinds.
