McDonald’s and Starbucks, the world’s leading fast food companies
If there is one thing that characterizes the fast food sector, it is the fierce competition between brands. In few economic activities do companies manage to establish themselves in local markets so naturally. This is demonstrated by the global dominance of McDonald’s, Starbucks, KFC and Subway, which are considered to be the fast food chains with the highest brand value.
Within the fast food market, which in 2022 had a turnover of more than 253 billion euros globally, McDonald’s and Starbucks are the long-time leaders, each in their own segment. The dominance in the burger sector of McDonald’s, considered the king of organized catering, is reflected in the following figure: with revenues of 21.322 billion euros last year, McDonald’s generates approximately ten times the revenues of Burger King or Wendy’s, its direct competitors. Its total system sales, which include company-owned and franchised restaurants, amounted to 109 million euros.
Starbucks’ turnover is eight times that of Tim Hortons, according to data collected by the M&A advisory boutique Bondo Advisors. If only company-owned locations are taken into account, its revenues are almost 30% higher than those of McDonald’s, even though McDonald’s is twice the size of Starbucks with franchises. This is because half of the coffee shop chain’s outlets are company-owned, a total of 18,250, compared to 5% for McDonald’s (2,100). At the franchise level, Starbucks operates 17,450 restaurants and McDonald’s 38,200.
Internationalization is one of the keys to the business success of both fast food brands.
While McDonald’s generates 47% of its sales in the United States and the remaining 53% outside, Starbucks concentrates 72% of its business in the local market, although China is gaining weight and contributed 10% of revenue in 2022.
Although the coffee shop has growth potential in several countries, it has increased its revenues 700-fold in the last 20 years. Meanwhile, with a much more consolidated international presence, the burger business has grown by 35%, from $17 billion in 2003 to $23 billion.
With a business model based on buying land and assuming all the costs of building the restaurants, McDonald’s earned more revenue from rent (65%) than from franchise fees (35%) last year. At the end of 2022, its investment in property and equipment exceeded 37,983 million euros, half of which corresponds to buildings. Starbucks has real estate assets of €46 million in land and €514 million in buildings.
