TIP858: MCDONALD’S ($MCD): GENERATIONAL COMPOUNDER IN HISTORICAL DRAWDOWN

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

TIP858: MCDONALD’S ($MCD): GENERATIONAL COMPOUNDER IN HISTORICAL DRAWDOWN W/ DANIEL MAHNCKE & SHAWN O’MALLEY

04 November 2026

Daniel Mahncke and Shawn O’Malley cover their first restaurant stock. Although one could argue it isn’t really a restaurant business at all. McDonald’s (NYSE: MCD) is the landlord behind $139 billion of yearly sales across roughly 46,000 restaurants. About 95% of those restaurants are run by franchisees, who paid McDonald’s around $10.4 billion in rent and $6 billion in royalties last year. That means about 91% of McDonald’s restaurant-level profit comes from collecting rent and royalties, not from selling burgers. 

Daniel and Shawn explain how Ray Kroc took over McDonald’s and came up with the real estate plans with his business partner Sonneborn. They also cover how Bill Ackman’s 2005 refranchising plan was rejected by management, then carried out a decade later by Steve Easterbrook, the CEO who was later fired and handed back $105 million. They look at why franchisees are currently pushing back, and what the roughly $8.5 billion of rent relief and remodel support announced at the September investor day means for shareholders. They also ask whether GLP-1 drugs can be a terminal risk for McDonald’s. In the end, they walk through the valuation model and decide whether the world’s most famous landlord is worth its price, and whether McDonald’s earns a spot in The Intrinsic Value Portfolio.

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IN THIS EPISODE, YOU’LL LEARN:

  • About McDonald’s journey to a global franchise
  • Why and how McDonald’s turned into a real estate company
  • How McDonald’s actually makes money
  • How the franchising business works
  • Why McDonald’s wants to sell more restaurants
  • How GLP-1 drugs change the business
  • What MCD’s stock is worth
  • Whether MCD will be added to The Intrinsic Value Portfolio
  • And much, much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: Welcome back to The Investor’s Podcast episode 858. And in our last episode, Shawn, I pitched GE aerospace to you and it’s a fantastic business, but neither of us is an expert on the industry, at least when it comes to the technology of what GE actually builds. And I would say neither of us is an expert on fast food either, but I’ve certainly bought more burgers in my life from McDonald’s than engines from GE.

[00:00:23] Shawn O’Malley: I certainly would be surprised if it was the other way around. And I know you have said though, that you haven’t eaten at McDonald’s in what, about a decade?

[00:00:31] Daniel Mahncke: That is true, although I actually did eat at McDonald’s last week for research purposes. Obviously I was landing in the evening in London for our latest Inner Circle community event, and I have a pretty sensitive stomach, as you know, so I didn’t want to go to some of the smash burger places that were open next to it.

[00:00:46] Daniel Mahncke: And since I knew I would have some pretty good food for the next couple of days, I could get to terms with eating at McDonald’s that night. But even if I’m not a regular customer, it’s way easier, I would say, to understand McDonald’s business, even though it’s not as much of a fast food chain anymore? And from at least an investing perspective, you actually look more at a real estate company.

[00:01:04] Shawn O’Malley: Well, and it’s one of, if not the biggest fast food brands globally, of course. And there have really been very few opportunities to buy McDonald’s at a discount at any point. But today we might have the chance to do so.

[00:01:20] Intro: Since 2014, with more than 200 million downloads, we have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investment in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:02:06] Shawn O’Malley: I looked back at all the episodes we did covering stocks, and I did notice that we’ve never covered a restaurant before. We’ve done airlines, e-commerce banks, luxury software, data centers, apps, and a whole bunch of other types of businesses, but not a single restaurant.

[00:02:24] Daniel Mahncke: Well, to be fair, most of them are not great businesses, although you can probably say the same for airlines or car manufacturers. And we still looked at them. Actually, I remember how we debated the tipping culture when I was in the US, and we kept being shocked by the idea of paying your employees one dollar 50 cents per hour and then charging 20 percent service fees, plus an additional tip for the waiters. Or at least I should say I was shocked.

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