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Operations Management 1 Operations Management Introduction: Overview of McDonalds Authors: James Njihia University of Nairobi Abstract Operational Management Content uploaded by James Njihia. Trefis expects the margin to reach 29.5% in 2019. McDonald's annual operating income for 2020 was $7.324B, a 19.25% decline from 2019. (PDF) Operations Management 1 Operations Management Introduction Total Estimated McDonald's Franchise Costs: $1,366,000 to $2,450,000 Section II - McDonald's Initial Franchise Fee, Royalty Fee, and Marketing Fee McDonald's initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company's 2022 FDD: Initial Franchise Fee: $45,000 Service Fee: 4% of Gross Sales A franchisor sells the right to use its brand and expertise to one who will open another branch of the business to sell the same products or services. But on top of paying franchise, advertising, and real-estate fees, operators are on the hook for a lot of other costs that they can't necessarily plan for such as upgrading kitchen equipment and remodeling restaurants. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters (including restaurants temporarily closed due to COVID-19). Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. The Company's revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. - McDonald's delivered Systemwide sales* growth of 21% for the full year, surpassing $112 billion globally, - U.S. comparable sales increased 13.8% for the full year, marking the highest U.S. annual comparable sales ever reported** and the 7th consecutive year of positive comparable sales, - Digital Systemwide sales exceeded $18 billion in 2021, or over 25% of total Systemwide sales in our top six markets, - McDonald's delivered operating income growth of 41% for the full year, surpassing $10 billion globally. That heightened efficiency results in profit in the long run. The amount of a franchisee's investment depends on whether they are purchasing an existing franchise (most new franchisees take this route) or starting a location from scratch. Food costs affect all restaurant operators, including McDonalds.