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Most people don't realize it, but McDonald's (MCD) is not a burger-flipping restaurant chain; it is one of the world's best real estate portfolios. Franchisees flip the burgers. McDonald's simply owns the best commercial property all over the world.

Although McDonald's first opened its doors in 1954, it wasn't until 1956 after courting many an investor did Ray Kroc consider and implement an idea put forth by Sonneborn, to tap into the real estate market. Shortly after Sonnenborn made his pitch to the investors , the Franchise Realty Corporation, McDonald's Real Estate subsidiary was born.

In simplified terms, McDonald's makes money on real estate via two methods. First, it buys and sells properties, as one might suspect. Often these are restaurant lots, but such is not necessarily always the case. McDonald's will buy properties that it feels are , or will be, hot locations, and it of course sells properties that are under performing or otherwise not doing so well. Again all of this seems pretty normal.

Secondly, on top of the franchise fee ( usually 8% ) which McDonald's charges its franchisees to use the " McDonald's " name, it charges rent to the franchisees to use the corporately-owned properties.

One of these days some large fund or investor will buy up shares of these golden arches for the purpose of spinning off its real estate division. This stock will go tremendously higher. There is a large underlying value in McDonald's shares.

Hows that for a Happy meal?

Disclosure: I do not own shares of McDonalds (MCD), neither for myself or clients. I do, however, plan on accumulating it.

Source: McDonalds Is a Real Estate Company