Pershing Square Activist Presentation Deck
(1)
II. Pershing's View of McDonald's
McDonald's
McDonald's: How the System Works...
Landlord, Franchisor, Restaurant Operator
▶ Franchisor: Franchises brand and collects fee
Operator: Operates 9,000 McDonald's restaurants
Landlord: Buys and develops real estate and leases to its
franchisees
Real Estate and Franchise estimated pre-tax ROI of 17.5%(¹):
Cost of Land
Cost of Building
Total Cost
Est. Average Unit Sales
Rent as a % of Sales
Franchise Income as % of sales
Rental Income
Franchise Income
Total Income
Unlevered Pre Tax ROIC
$650k
650k
$1,300k
$1,750k
9.0%
4.0%
$158
70
$228
17.5%
Illustrative return based on Pershing's assumptions for the cost of land and building and approximate average unit sales in 2004.
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Franchisees
Franchise Fee: 4% of
restaurant sales
Rent: greater of a
minimum rent or a percentage
of restaurant sales (current
avg. -9% of sales)
Franchisee bears all
maintenance capital costsView entire presentation