It is not an accurate statement to say that McDonald's market value is higher than KFC.

Because McDonald's is listed with the entire McDonald's as the main body, and KFC is not a listed company. KFC is just a brand of the listed company Yum Brands. Therefore, it should be said that McDonald's market value is much higher than that of Yum Brands. It is more accurate.

The current share price of McDonald's is about US$204, and the total market value is about US$156 billion. The share price of Yum Brands is only about US$110, and the total market value is only about US$35 billion. This is equivalent to McDonald's stock price being about twice that of Yum Brands, and its market value is that of Yum Brands.

About 4.5 times.

As for the market value of McDonald's being higher than that of Parkson Restaurant Group, this is normal, because McDonald's has more advantages than KFC in terms of scale and profits.

In fact, from the perspective of P/E ratio, the P/E ratio of McDonald's and Yum! Brands is about 27.6, while the P/E ratio of Yum is about 25.5%. The gap between the two is not very big. It can be seen that the market values ????the two.

The valuation logic is almost the same.

The reason why McDonald's total market value is much higher than that of Yum is because its scale is much higher than that of Yum. We can see this by simply comparing some data.

1. Number of stores. As of now, McDonald's has more than 35,000 stores worldwide, while KFC has only about 18,000 stores worldwide.

2. Operating income and net profit.

In 2018, McDonald's had an operating income of US$21.025 billion and a net profit of US$5.923 billion; Yum! had an operating income of US$5.688 billion and a net profit of US$1.542 billion.

This is equivalent to McDonald's operating income being about 3.7 times that of Yum!, and its net profit being about 3.85 times that of Yum!

3. KFC’s China business is operated independently.

Whether it is McDonald's or KFC, China is their most important market.

But starting in 2016, Yum China was spun off from Yum! Brands and independently listed on the New York Stock Exchange on November 1, 2016. It has exclusive rights to the three brands of KFC, Pizza Hut and Taco Bell in the Chinese market.

Operating and licensing rights, and fully owns the Oriental Jibai and Little Sheep restaurant chains.

According to Yum China’s 2018 annual report, Yum China’s revenue in 2018 reached US$8.42 billion, equivalent to approximately RMB 56 billion; net profit was US$708 million.

This means that Yum China's turnover is much higher than that of the entire Yum Group in other regions around the world, which still has a great impact on the overall operating income of Yum Restaurant Group.

Therefore, there is currently a big gap between Yum Brands and McDonald's in terms of operating income and profit scale, so it is understandable that there is a gap in market value.

At present, whether it is McDonald's or KFC, they basically adopt the direct operation and franchise model.

But McDonald's is obviously doing better than KFC in developing its franchise model.

At present, a large part of McDonald's income comes from rent, and franchise stores have become McDonald's main source of income.

For McDonald's, franchise stores are basically a sure-profit business. McDonald's only provides branding and training support, and then McDonald's will choose its own address and then attract investment.

McDonald's is very ruthless when it comes to site selection. They take a very long-term view. Generally, they will negotiate 20 to 30-year contracts with the owners. In this way, they can earn a considerable rent difference after recruiting investors to join.

In addition, franchisees must pay a certain licensing fee to McDonald's every year. The licensing fee is generally about 4.5% of turnover, so McDonald's can earn very considerable profits from these franchise stores every year.

For example, in 2016, McDonald's overall revenue was US$24.6 billion, including US$15.3 billion from directly operated stores and US$9.3 billion from franchise stores. Among the US$9.3 billion in franchise store turnover, rent was US$6.1 billion and licensing fees were US$3.1 billion.

The remaining 1% is margin.

In addition, the operating profit of McDonald's directly-operated stores in 2016 was only about 2.6 billion U.S. dollars, while the profit of franchise stores reached about 7.6 billion U.S. dollars, which is equivalent to about 3/4 of McDonald's profits coming from franchise stores.

Because of this, McDonald's annual operating income and profits are very considerable, and its earnings per share are much higher than Yum!

For example, in the first quarter of 2019, Yum!'s earnings per share were about US$0.85, while McDonald's' earnings per share reached US$1.74, which is equivalent to McDonald's earnings per share being about twice that of KFC.

After considering various factors, McDonald's currently has more advantages than KFC, so it is easier to be recognized by investors. Therefore, it makes sense that the stock price is higher than Yum! and the market value is much higher than Yum!

McDonald's (stock code MCD) closed at $204.26 on Friday. The company has a total share capital of 764 million shares and a total market value of 155.964 billion.