Key Takeaway: McDonald's earns more from rent than from royalties, three years running, by design. Put your own revenue lines through four columns, revenue, margin, days to collect, cash generated, then one mark: would this line show up next year if you did nothing? On an illustrative €2M business the biggest revenue line is the second cash engine, and the only line marked yes is a quarter of the revenue and nearly half the cash. Illustrative.
By Samer Azar
Dear reader,
McDonald's collected $10.4 billion in rent last year. Royalties on the food came to $6.0 billion.
Their table, not mine. Three years, same order.
Most people hear that as trivia. It is the shape of the whole business.
The landlord side is 1.7 times the burger side, and it has been for three years running. Each restaurant it franchises directly pays about $463,000 a year in rent before a single royalty reaches head office.
Two invoices for the same amount can be completely different assets. One comes back next year on its own. The other you win again from zero. McDonald's has $31.5 billion of the first kind already contracted, and its filing calls that a design.
First, what you told me
I asked who you are again last issue and the shape held: founders and operators, finance leaders, and people here to learn, with no group in the majority. So this issue works twice, once on your own lines and once on a client's.
One click if you have not done it.
Which best describes you?
One click. It tells me who I'm writing for and makes these issues sharper.
Worth your time this week
CFO turnover is heading for 18.3%, its highest since 2019. Private equity is hiring finance chiefs straight out of public companies, and more than one in ten of the largest US companies had changed theirs before August. The finance person across the table from you may be new to the seat.
Private credit lenders now negotiate for your 13-week cash forecast. Read it as the preview of next issue: customer-payment behaviour and receivables detail are now part of the terms, and the borrowers who can produce them cleanly get the better ones.
Delta's frequent-flyer scheme is valued at $31.7 billion, and the industry earns $7.90 a passenger from flying. Same shape as this issue, from the other side: the line that comes back on its own is the one the airlines pledged as loan collateral during the pandemic.
Same shape for 10 years
Rent has beaten royalties at McDonald's three years running, 63% of what its franchised restaurants send in.
A decade back, same shape: 1.97 times royalties in 2015, 1.74 times in 2025. The filing's own word for that is "designed".
Even without signed leases the mark works at any size: every business has lines that come back and lines it wins again from zero.
Sears went the other way. It sold 235 of its own stores for $2.7 billion in 2015 and rented them back.
Three years and three months later it filed, and I am not claiming the sale caused that. Buildings it owned became rent it paid, and the revenue chart never moved.
Costco shows the mark from the other side. Membership fees were $5.3 billion last year, half its operating income, and 92.3% of US and Canada members renewed.
A euro that comes back on its own is worth more than a euro you have to win again.
3 lines on a €2M business
Last issue I showed you how long the cash is stuck inside a business. This issue: which line produces the cash, and which one you win again every year.
Here is the sheet on an illustrative €2M business, invented so you can check the arithmetic. Down the left, the things you sell.
Across the top: revenue, margin after the direct cost of delivering it, days from invoice to money in the bank (the days the bank saw, not the days the contract says), and cash generated, which is revenue times margin.
Then one mark, a yes or a no rather than a number: would this line show up next year if you did nothing? That mark is the quality of your revenue, and no chart can show it.
Line | Revenue | Margin | Days to collect | Cash generated | Comes back on its own |
|---|---|---|---|---|---|
Big projects | €1,200,000 | 18% | 95 | €216,000 | No |
Retainers | €500,000 | 52% | 5 | €260,000 | Yes |
One-off work | €300,000 | 30% | 45 | €90,000 | No |
Big projects are 60% of revenue and only the second cash engine, at 38% of the cash. Retainers are 25% of revenue, 46% of the cash, and the only line marked yes.
Run yours and one of three things happens:
The lines agree. Your biggest revenue line is your biggest cash engine. Protect it.
A smaller line generates more cash for its size. Feed it, and stop calling it the small one.
One line is taking money out while the chart holds. Reprice it, restructure it or refuse it.
Each needs a decision. Here is the sheet, with an empty tab for yours.
Days before margin, every time
For years I ran those columns in the wrong order, margin first, because margin is what the P&L talks about.
Margin is an opinion: move one shared cost between lines and it changes. Days to collect is a fact of the bank account. Do days first, or you fall in love with the wrong revenue line, and I have.
One more test for every line: could you refuse it? If not, it has stopped being revenue and started being a dependency, whatever the invoice says.
One question you can answer without opening anything: which of your revenue lines would still be there next year if you did nothing?
A bank or a buyer will run these columns on you either way. The only question is who finds out first.
I walked the whole thing through the filing on camera.
An agent that remembers every call
Files from building the AI CFO. Every client email and meeting, mined into what was agreed, with the source attached.
Every call and every email with a client carries two or three things that matter later: a price that was agreed, a hire that was decided, a date someone promised. Six weeks on, nobody remembers which thread it sat in.
So the AI CFO reads all of it. Across 7 client workspaces it has read about 4,000 emails and meeting transcripts and turned them into claims, each one pinned to the message or the minute it came from.
The rule that made it useful was not the first one I wrote. The first version produced lines like "seven overdue tasks signal delivery risk", which is a dashboard restated with a scary word on it.
The test now is one question: would they otherwise have to remember this, or go digging through a thread? The price rise agreed on a call, and the second one planned for January, passes. A count that already sits on a dashboard does not.
What it captured for a demo company from two calls and five emails. Demo data, not a client.
The part I would not skip: it never merges two facts on its own unless they are word for word the same. Anything ambiguous goes to a queue where a human approves or dismisses, and a merge never deletes.
A duplicate costs two seconds. A wrongly merged fact is invisible, and you find out in front of the client.
Steal it:
Inputs. Every client call transcript and email thread, nothing summarised by a human first.
The test for each line. Would you otherwise have to remember it, or dig for it? If it already sits on a dashboard, drop it.
Human in the loop. An approve-or-dismiss queue for anything ambiguous, and merging never deletes.
If you know a finance lead who sits through ten client calls a week, forward them this.
Your spreadsheet is now Claude Code
Do not get intimidated. Do not put this off for later.
Know who the knocker-upper was? Before alarm clocks existed, there was a person whose job was to walk through town with a long stick, tapping on windows to wake people up for work. That job disappeared overnight when alarm clocks became cheap.
Spreadsheets are the long stick. Claude Code is the alarm clock.
Don't be a knocker-upper.
Reply with the line that would still be there next year if you did nothing, the one you named a few paragraphs up. The line, not the number. I will report the shape of the answers in the next issue.
Reply and let me know what's on your mind finance / AI / growth-wise. I read every one.
Take care of your cash, and it takes care of almost everything else.
Samer
Next issue: what a lender wants to see in the file.
These four columns are the first page of it.
If you work in finance, you know a founder whose biggest revenue line is their smallest cash engine. Forward them this issue.
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I'm building Cash Actions in the open, for founders who want the drift caught while it is still small.
And one I read every week:
Frequently asked
What does "quality of revenue" mean in plain terms?
It is the difference between a euro that comes back next year on its own and a euro you have to win again from zero. Two invoices for the same amount can carry opposite marks. Lenders and buyers price a business on that mark, so it is worth knowing yours before they do.
Why does McDonald's earn more from rent than from royalties?
Under its standard franchise setup, McDonald's owns the land or holds the lease under the restaurant, and the franchisee pays rent on it. In FY2025 that rent came to $10.4 billion against $6.0 billion of royalties, and the same order holds in each of the two prior years. Its filing calls the model "designed to generate stable and predictable revenue".
How do I run the four columns on a small business in ten minutes?
List the two to five things you sell down the left of a page. For each, write revenue, margin after direct costs, days from invoice to money in the bank, and revenue times margin. Then mark each line yes or no: would it show up next year if you did nothing? Pen and paper is enough.
Why does days to collect come before margin?
Margin moves whenever a shared cost is allocated differently, so it is an opinion until someone checks it. Days to collect is read straight off the bank account and cannot be argued with. Filling in days first stops you falling for a line that looks profitable but pays late or never.
What do I do with a revenue line that is taking money out?
First confirm it with the columns: negative or near-zero cash generated, long days to collect, marked no. Then decide, because the chart will not force the decision for you. The choices are usually reprice it, change its terms, shrink it, or keep it deliberately as a door-opener with a cap on its share.