Understanding McDonald's: Comprehensive company primer and profitability analysis

Part 5
Understanding McDonald's: Comprehensive company primer and profitability analysis (Part 5 of 21)

McDonald’s global footprint: Bringing obesity to both developed and emerging markets

The company both franchises and operates its restaurants. Of the 34,480 restaurants in 119 countries at year-end 2012, 27,882 were franchised or licensed (including 19,869 franchised to conventional franchisees, 4,350 licensed to developmental licensees, and 3,663 licensed to foreign affiliates—primarily in Japan) and 6,598 were operated by the company.

MCD Segment Revenues (Geography)Enlarge Graph

According to McDonald’s 2012 annual report, the U.S., Europe, and Asia Pacific, the Middle East, and Africa (APMEA) segments account for 32%, 39%, and 23% of total revenues, respectively. The United Kingdom, France, and Germany, collectively, account for 51% of Europe’s revenues. China, Australia, and Japan (a 50%-owned affiliate accounted for under the equity method), collectively account for 56% of APMEA’s revenues. These six markets, along with the U.S. and Canada, are referred to as “major markets” throughout this report and comprise 70% of the company’s total revenues.

In the following graphs, you can see how both McDonald’s revenues and operating income by geography have evolved over time. It helps to see that Europe represents the largest percentage of the company’s revenues but has lagged when it comes to operating income due to lower margins. This may be due to higher unionized wages in Europe, along with higher agricultural commodity costs. U.S. growth has also been stagnant, whereas Europe has been the fastest-growing segment post-crisis. The table at the bottom of the article provides more granular data.

revenue by geographyEnlarge Graph


operating income by geographyEnlarge Graph

revenue by geography tableEnlarge Graph

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