Mcdonald's Overview
McDonald's Corporation is the world's largest restaurant company by systemwide sales and one of the most valuable consumer brands in existence. It is best understood not as a hamburger business but as a franchisor and real-estate owner that monetises a globally standardised operating system through rent and royalty streams. At year-end 2025 the System comprised 45,356 restaurants across more than 100 countries, approximately 95% of which were owned and operated by independent franchisees (FY2025 Form 10-K, Business Summary). Systemwide sales — the sales rung across the entire System, only a fraction of which the Company records as its own revenue — reached $139.4 billion in FY2025, against reported consolidated revenues of $26.9 billion. That gap is the architecture of the business: McDonald's captures a high-margin, contractually protected slice of a very large sales base while franchisees bear the operating cost and capital burden of the restaurants themselves. The result is a 46.1% operating margin, roughly $10.6 billion of annual operating cash flow, and 50 consecutive years of dividend increases — set against a persistent shareholders' deficit created by decades of buybacks. The strategic question facing the Company in 2026 is whether the "Accelerating the Arches" playbook, which restored comparable sales growth in 2025, can sustain traffic in a U.S. market where guest counts remain under pressure.
1.1 Employees — three-year trend
The Company's disclosure is qualitative ("over 150,000" Company employees; "over two million" individuals in franchised restaurants) and has not varied materially in wording across FY2023–FY2025 10-Ks. Precise headcount by year is not publicly disclosed. Company employees comprise corporate staff and crew in Company-owned and operated restaurants only; franchisee employees are not McDonald's employees.
2.1 The Company's own description
The FY2025 Form 10-K states that the Company "franchises and owns and operates McDonald's restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries," and that of the 45,356 restaurants at year-end 2025, approximately 95% were franchised. It describes itself as "primarily a franchisor" and states its belief that "franchising is paramount to delivering great-tasting food, locally relevant customer experiences and driving profitability." Company-operated restaurants are retained deliberately: they give the Company "a venue for restaurant operations training experience" and allow it to "develop and refine operating standards, marketing concepts and product and pricing strategies," and they establish credibility as a franchisor.
The Company measures its competitive position within the "informal eating out" (IEO) segment, which it defines as inclusive of quick-service restaurants but also home delivery/takeaway providers, convenience stores, street stalls and kiosks, cafés, specialist coffee shops, self-service cafeterias and juice/smoothie bars.
2.2 Independent characterisation
McDonald's is a three-layer business, and the layers have materially different economics.
Layer one — the franchise royalty and rent stream. Under a conventional franchise arrangement, the Company generally owns or holds a long-term ground lease on the land and building; the franchisee funds equipment, signage, seating and décor. The Company then collects rent (with specified minimum payments) plus a royalty as a percentage of sales, together with an initial fee on opening or on grant of a new franchise. Franchise agreements generally run 20 years. This is the profit engine: franchised revenues of $16,548 million in FY2025 converted into $13,930 million of franchised margin — an 84.2% margin — and franchised margins represented approximately 90% of total restaurant margin dollars. The rent component is what distinguishes McDonald's from a pure-royalty franchisor such as Yum! Brands: at 31 December 2025 the Company owned approximately 56% of the land and approximately 80% of the buildings for restaurants in its consolidated markets.
Layer two — Company-owned and operated restaurants. Sales of $9,690 million in FY2025 produced restaurant margin of only $1,422 million — a 14.7% margin. This layer is capital-intensive, wage- and commodity-exposed, and structurally lower-return. It exists for control and capability reasons, not for profit. Its FY2025 U.S. margin of $360 million on $3,115 million of sales (11.6%) was called out by management as unsatisfactory; the CFO described U.S. company-operated margins as "unacceptable" on the Q1 2026 earnings call.
Layer three — technology recharges and brand licensing ("Other revenues"). This is the fastest-growing revenue line, at $647 million in FY2025 (+53% year over year, +52% in constant currency), comprising fees paid by franchisees to recover a portion of the Company's costs for technology and digital platforms, plus consumer-packaged-goods brand licensing. It is small but strategically significant: it converts the Company's platform investment into a recoverable, System-funded cost rather than a corporate P&L drag.
Ownership structures. Three exist. Conventional franchise: Company holds the real estate, collects rent plus royalty. Developmental licence: licensee provides all capital including real estate; Company receives a royalty percentage plus initial fees and invests no restaurant capital. Affiliate: as developmental licence, but the Company also holds an equity investment and records its share of results in equity in earnings of unconsolidated affiliates — used principally in China and Japan.
Revenue model mix. McDonald's has no subscription revenue and no product-sales business of consequence. The mix is approximately: franchising fees (rent + royalty + initial fees) 61.5% of FY2025 revenue; Company restaurant product sales 36.0%; technology recharge and licensing 2.4%.
Customer types and end-markets. The end-customer is the mass-market restaurant consumer, skewing toward value-seeking and convenience-seeking households; the Company's direct commercial counterparties are its franchisees (the licence customers), its suppliers, and its delivery-aggregator partners. End-markets served are the global IEO segment across more than 100 countries, with the burger, chicken, breakfast and beverage categories the principal battlegrounds.
Value-chain position. McDonald's occupies the brand, standards, real-estate and demand-generation node. It does not manufacture food, does not own its distribution network, and — in 95% of locations — does not employ the crew. It sets and enforces Global Brand Standards, controls the menu architecture and marketing, arbitrates supply-chain sourcing at scale, and owns the property beneath a large share of the estate. Its principal structural vulnerability is that its revenue is a derivative of franchisee sales, and its principal structural strength is that its costs are largely fixed and its capital requirements are shared.
Strategy
10.1 The stated strategy — Accelerating the Arches
The FY2025 10-K describes Accelerating the Arches as encompassing "all aspects of McDonald's business as the leading global omni-channel restaurant brand," reflecting the Company's purpose (to feed and foster communities), mission (to make delicious feel-good moments easy for everyone), five values (Serve, Inclusion, Integrity, Community, Family), the M-C-D growth pillars, and three technology-enabled platforms.
M — Maximize our Marketing. Investing in "new, culturally relevant approaches, grounded in fan truths," under a "Feel-Good Marketing" approach. Committed to "a marketing strategy that highlights value at every tier of the menu," spanning everyday low price, affordable meal bundles, limited-time deals and personalised digital offers. FY2025 execution included the largest-ever global collaboration, with the Minecraft movie, and the Grinch holiday campaign, which the proxy states "sparked sellouts" in several markets.
C — Commit to the Core. Focus on iconic products — World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets — described as among "seventeen unique billion-dollar brands." Two named programmes: Best Burger, a set of operational and formulation changes targeted for deployment to nearly all markets by end of 2026; and aggressive expansion in chicken, with McCrispy deployed in nearly all major markets by end of 2025 and extended into strips and wraps. Beverages are identified as "a significant opportunity to drive long-term growth."
D — Double Down on the 4D's: Digital, Delivery, Drive Thru and Restaurant Development. Each carries an explicit, dated target (see 10.3).
Foundation and platforms. Three technology-enabled platforms: a Consumer platform ("one of the world's largest consumer platforms to fuel engagement"); a Restaurant platform (a single universal cloud-based software stack that all McDonald's restaurants will run on); and a Company platform (the GBS organisation). Foundational commitments: running great restaurants, empowering people, modernising ways of working.
Capital allocation philosophy (stated verbatim in structure): (i) invest in opportunities to grow the business and drive strong returns, including capital expenditure and investments in technology, digital and GBS; (ii) prioritise the dividend; (iii) repurchase shares with remaining free cash flow over time. The ordering matters — buybacks are explicitly third in line, which the FY2025 cash flow data confirm in practice.
10.2 Announced strategic initiatives, last 24 months
10.3 Medium-term targets
Discrepancy flagged: the FY2025 10-K, the 2026 proxy Chairman's letter and the Company's public statements consistently state the 50,000-restaurant target is for end of 2027. One third-party summary of the Q2 2026 filing states "targeting 50,000 global units in 2028." The primary filings should be preferred; the 2028 reference may reflect either a transcription error or an unannounced timeline extension, and warrants verification at the September 2026 Investor Day.
10.4 FY2026 guidance
Products & Services
McDonald's operates a substantially uniform global menu with deliberate geographic variation. Pricing at restaurant level is set by franchisees, not the Company, and is therefore not systematically disclosed; where prices appear below they are indicative U.S. observations reported publicly, not Company disclosure. The Company states that seventeen of its brands are individually "billion-dollar brands."
5.1 Beef and burgers
5.2 Chicken
5.3 Fish, breakfast and sides
5.4 Beverages and desserts
5.5 Value platforms (pricing architecture)
5.6 Channels and digital platforms
5.7 Ancillary and discontinued
Product Portfolio
| Product | Description and positioning | Target customer | Notes |
|---|---|---|---|
Big Mac | Two beef patties, special sauce, lettuce, cheese, pickles, onions on a three-part sesame bun. Launched nationally 1968. The Company's signature global product and a billion-dollar brand. | Core mass market, all dayparts from lunch | Anchor of brand identity; used as a global price index by third parties |
Quarter Pounder with Cheese | Fresh-beef (U.S.) quarter-pound patty. Reformulated to fresh beef in U.S. in 2018. | Premium-leaning beef customer | Subject of the October 2024 E. coli event via slivered onions |
Double Quarter Pounder with Cheese | Two quarter-pound patties | High-appetite occasion | Indicative U.S. price approximately $7.29 (2026 observation) |
Double Bacon Quarter Pounder with Cheese | Bacon-added premium build | Premium beef | Indicative U.S. price approximately $8.49 (2026 observation) |
Big Arch | Two quarter-pound patties, three slices of white cheddar, crispy and slivered onions, lettuce, pickles, Big Arch Sauce on sesame-and-poppy-seed bun. Debuted Portugal July 2024; expanded to Canada, Germany, Australia, UK, Ireland, France; U.S. national launch 3 March 2026 (limited time); made permanent in the UK. | Large-burger occasion; direct answer to premium burger competitors | Indicative U.S. price approximately $8.59 (2026 observation), the highest-priced burger on the menu |
Hamburger / Cheeseburger / Double Cheeseburger / McDouble | Core value beef tier | Price-sensitive core traffic | McDouble is a component of U.S. Meal Deals |
McRib | Boneless pork patty with barbecue sauce; recurring limited-time offer | Nostalgia-driven promotional traffic | Scarcity-marketed |
Best Burger | Not a product but an operational and formulation programme — changes to bun toasting, patty searing, cheese melt and grill sequencing to deliver hotter, juicier burgers. Targeted for deployment to nearly all markets by end of 2026. | System-wide quality upgrade | Named explicitly in FY2025 10-K "Commit to the Core" pillar |
| Product | Description and positioning | Target customer | Notes |
|---|---|---|---|
Chicken McNuggets | Launched nationally 1983; a billion-dollar brand | All ages; strong Happy Meal and sharing role | Core of chicken category share |
McCrispy (sandwich) | Crispy chicken fillet sandwich platform; deployed in nearly all major markets by end of 2025 | Direct competitor to specialist chicken chains | The Company's principal chicken share-gain vehicle |
McCrispy Strips | Line extension of the McCrispy brand into tenders/strips, in several markets | Snacking and sharing occasion | Extension announced under Commit to the Core |
McCrispy Wraps / Snack Wraps | Wrap format built on the McCrispy platform | Lighter and portable occasion | Market-dependent availability |
McChicken | Value-tier chicken sandwich | Price-sensitive core traffic | Component of U.S. Meal Deals |
McSpicy | Spicy chicken sandwich platform, prominent in Asian and European markets | Spice-seeking and locally-adapted palates | Named in FY2025 10-K product description |
| Product | Description | Notes |
|---|---|---|
Filet-O-Fish | Fish sandwich; one of the oldest continuous menu items | Named in 10-K |
World Famous Fries | The Company's most-ordered item and a billion-dollar brand | Named as a core item in the growth strategy |
Hash Browns | Breakfast side | |
Egg McMuffin | Founding breakfast sandwich | Named in 10-K |
Sausage McMuffin with Egg | Breakfast sandwich | Named in 10-K |
McGriddles | Griddle-cake breakfast sandwich | Named in 10-K |
Biscuit and bagel sandwiches | Regional breakfast builds | |
Hotcakes, oatmeal, breakfast burritos | Breakfast range | Full or limited breakfast menu offered in the U.S. and many international markets |
| Product / platform | Description | Launch / status |
|---|---|---|
McCafé | Global coffee and espresso beverage platform; originated Melbourne 1993 | Long-established; a billion-dollar brand |
U.S. beverage platform (2026) | Six new specialty beverages — three Refreshers and three crafted sodas — launched across all U.S. restaurants on 6 May 2026, with simultaneous launches in Germany and Canada. Energy drinks flagged to follow later in summer 2026. Management characterised it as an incremental revenue layer and a tailwind for the balance of 2026. | Launched May 2026 |
McFlurry | Frozen dessert platform with rotating confectionery partners | Ongoing |
Shakes, sundaes, soft-serve cones, pies, cookies | Core dessert range | Ongoing; Shamrock Shake is a recurring seasonal item |
Soft drinks | Fountain beverages; self-serve fountains being phased out of U.S. restaurants, with beverage preparation moving behind the counter. Reported plan to complete the phase-out by 2032. | Phase-out began 2023, accelerated materially in H1 2026 |
| Platform | Market | Description | Status |
|---|---|---|---|
$5 Meal Deal | U.S. | Fixed-price bundle launched June 2024 as the opening move of the value response | Superseded/absorbed into McValue |
McValue | U.S. | Menu section combining everyday low price, bundles and app-exclusive offers; launched January 2025 | Revamped in 2026: the "buy one, add one for $1" offer replaced by an "under $3" menu |
Extra Value Meals | U.S. | Relaunched combo-meal architecture; cited by management as a driver of Q1 2026 U.S. comparable sales of +3.9% | Active |
Meal Deals | U.S. | McDouble or McChicken with 4-piece nuggets, small fries and small drink | Retained in the 2026 revamp |
$4 Breakfast Meal Deal | U.S. | Sausage McMuffin or biscuit, hash brown and small McCafé coffee | Active at participating locations |
Everyday Affordable Price / Meal Bundles | International | Equivalent value architecture across international markets; named in the 2026 proxy as core to the value programme | Active |
| Platform | Description | Scale and targets |
|---|---|---|
Loyalty programme / mobile app | Personalised offers, points, ordering and payment | Operating in 70 markets. Nearly 210 million 90-day active users at year-end 2025. Target: 250 million 90-day active users by end of 2027. Systemwide sales to loyalty members: over $38 billion on a trailing-twelve-month basis as of Q1 2026, and over $9 billion in that quarter alone. Target: $45.0 billion annual systemwide sales to loyalty members by end of 2027. |
Ready on Arrival | Crew begin assembling a mobile order before the customer arrives | Deployed in the top six markets by end of 2025 |
Order Ahead | Ahead-of-time ordering in the app | Cited in the 2026 Chairman's letter as shortening pickup times |
Delivery | Offered from nearly 41,000 restaurants across approximately 100 markets — approximately 90% of the estate. In-app delivery ordering live in five of the top markets. | Target: 30% of Systemwide delivery sales originating from the mobile app by end of 2027 |
Drive Thru | Nearly 29,000 drive-thru locations globally, including over 95% of the approximately 13,700 U.S. locations. The Company states it has the most drive-thru locations worldwide. | Vast majority of new U.S. and IOM openings will include a drive thru |
Consumer platform | One of the world's largest consumer engagement platforms, unifying brand, physical and digital assets to drive loyalty frequency | Under development |
Restaurant platform | A single universal cloud-based software stack intended to run all McDonald's restaurants, replacing market-by-market systems | Under development |
Company platform | Global Business Services (GBS) organisation to modernise internal ways of working | Under development; led by a dedicated President, Global Business Services |
| Item | Status |
|---|---|
Happy Meal | Core child/family offering since 1979; monetised through IP collaborations. 2026 activations included the Pokémon Trading Card Game 30th-anniversary Happy Meal (Feb–Mar 2026) and a nationwide Crocs collectible Happy Meal (10 March 2026). |
CosMc's | Beverage-led spin-off concept, first opened Bolingbrook, Illinois, December 2023; all locations closed in 2025. Certain beverage learnings were folded into the 2026 U.S. beverage platform. |
Consumer packaged goods licensing | Brand licensing arrangements to market and sell CPG using the McDonald's brand; revenue recorded within Other revenues. |
Ronald McDonald House Charities | Not a commercial product; supported by the Company across a global network of nearly 250 local chapters in more than 60 countries and regions. |
Financial Narrative
6.1 Income statement (USD M except per-share and percentages)
Basic EPS is not separately disclosed in the sources consulted for all five years and is therefore not tabulated; diluted EPS is the Company's headline measure. Weighted-average diluted share counts for FY2021 and FY2022 are derived from net income divided by reported diluted EPS and are approximate. FY2021 gross margin, SG&A and impairment figures are as presented by a third-party aggregator of the FY2021 10-K; minor rounding differences against the primary filing are possible.
6.2 Margin analysis (%)
EBITDA is not a Company-reported measure. It is approximated here as operating income plus total depreciation and amortisation. The Company discloses that FY2025 restaurant margins included D&A of approximately $1.7 billion (FY2024: approximately $1.6 billion) and that SG&A D&A was $457 million in FY2025 (FY2024: $447 million), implying total D&A of approximately $2.2 billion in FY2025 and approximately $2.1 billion in FY2024. FY2021–FY2023 D&A is approximated and the resulting EBITDA margins should be treated as indicative rather than precise.
6.3 Revenue growth and CAGR
Revenue CAGR FY2021→FY2025: 3.7%. Systemwide sales for FY2022–FY2024 are not tabulated because the Company presents growth percentages rather than absolute dollars in the filings consulted for those years; FY2021 ($112.5 billion, per the 2022 proxy) and FY2025 ($139.4 billion, per the FY2025 10-K) are directly disclosed. Implied Systemwide sales CAGR FY2021→FY2025 is approximately 5.5%.
6.4 Balance sheet (USD M)
Goodwill and intangibles: the Company discloses goodwill separately but does not present a material separately-identified intangible asset balance; other intangibles are embedded within the "Miscellaneous" other-assets line ($6,331 million at FY2025) and are not separately disclosed.
6.5 Cash flow (USD M)
FY2021 dividends paid and treasury stock purchases are not verified in the sources consulted and are therefore left blank rather than estimated. FCF conversion for FY2021–FY2023 is calculated as free cash flow divided by net income; the Company directly disclosed 84% for FY2025 and 81% for FY2024.
Note on a source discrepancy: the FY2025 10-K MD&A cash flow narrative as rendered by one extraction describes FY2025 free cash flow as "a decrease of $510 million or 8%," while the 2025 Financial Performance summary in the same document states free cash flow of $7.2 billion, "an 8% increase from the prior year." The arithmetic ($10,551m − $3,365m = $7,186m in FY2025 versus $9,447m − $2,775m = $6,672m in FY2024) supports an increase of approximately $514 million, or 8%. The dossier uses the increase.
6.6 Ratio analysis
Return on equity is not meaningful because shareholders' equity has been negative in every year of the period, a mechanical consequence of $79.3 billion of cumulative treasury stock exceeding $70.3 billion of retained earnings. Debt to equity is not meaningful for the same reason; the Company's own substitute disclosure, total debt as a percentage of total capitalisation, exceeds 100% for that reason and has been improving (114% → 105%) as the deficit narrows.
Cash conversion cycle is not meaningfully computable. Inventories are trivial ($61 million on $26.9 billion of revenue, roughly 0.8 days of Company-operated restaurant food and paper cost), franchisees settle rent and royalties on short cycles, and the Company has no material trade receivable from end consumers. The working-capital position is structurally negative-to-neutral by design; the swing to a $198 million working-capital deficit in FY2025 reflects the deliberate run-down of cash from $4.6 billion (FY2023) to $774 million rather than any liquidity stress, since the Company retains $10.3 billion of unused board-authorised borrowing capacity, $5.0 billion of commercial paper authorisation and a $4.0 billion committed line of credit.
6.7 Commentary on trends, inflections and drivers
FY2021 — the post-pandemic snapback. Revenue of $23.2 billion, operating income of $10.4 billion and a 44.6% operating margin were flattered by a net gain of $285 million in impairment and other charges. Systemwide sales reached a then-record $112.5 billion. The year established the base against which the Accelerating the Arches strategy, launched in late 2020, would be measured.
FY2022 — the Russia inflection. Revenue was flat at $23.2 billion but operating income fell 9.5% to $9,371 million and net income fell 18.1% to $6,177 million. The proximate cause is visible on one line: impairment and other charges swung from a $285 million gain to a $1,010 million charge, principally the exit from Russia. Company-operated sales fell $1,039 million as the Russian estate was deconsolidated. Operating margin compressed 420 basis points to 40.4%. This was a discrete, non-recurring event, not an operating deterioration.
FY2023 — the strongest year of the period. Revenue rose 10.0% to $25,494 million on global comparable sales of +9.0%, with all three segments in high single digits (U.S. +8.7%, IOM +9.2%, IDL +9.4%). Operating income rose 24.3% to $11,647 million and margin recovered to 45.7%. ROIC peaked at 25.2%. Critically, however, the comparable sales were substantially price-driven: menu prices had risen materially since 2019, and the traffic consequences of that pricing became the defining issue of the following two years.
FY2024 — the value reckoning. Revenue grew only 1.7% and global comparable sales turned negative (−0.1%), the first decline outside a pandemic year in a decade. Net income fell 2.9% to $8,223 million. Three forces converged: consumer resistance to accumulated price increases, particularly among lower-income households; the October 2024 E. coli outbreak, which depressed U.S. traffic sharply in affected markets and prompted approximately $100 million of remedial marketing; and $291 million of impairment and other charges spanning Accelerating the Organization restructuring, the South Korea disposal and the Israel acquisition. Interest expense rose 10.7% to $1,506 million as the debt stack repriced. ROIC fell 340 basis points to 21.8%.
FY2025 — a competent recovery, not a re-acceleration. Revenue rose 3.7% to $26,885 million; global comparable sales returned to +3.1%; operating income rose 5.8% to $12,393 million; operating margin reached a period high of 46.1% and non-GAAP operating margin 46.9%. Diluted EPS of $11.95 rose 5%. Three drivers deserve isolation. First, currency turned from headwind to tailwind: foreign currency translation added $385 million to revenue, $198 million to operating income and $0.16 to diluted EPS. Excluding currency, revenue grew only 2% and operating income 4%. Second, the growth was franchised, not operated: franchised margin rose $752 million while Company-operated margin fell $25 million, and U.S. Company-operated margin fell $57 million on a 3% sales decline. The value strategy is working at the top line and at the franchisee-royalty line while compressing the Company's own restaurant P&L. Third, restaurant development stepped up materially: 2,276 openings against 396 closures (versus 2,116 and 461 in FY2024), driving capital expenditure up $590 million or 21% to $3,365 million and net property and equipment up $2.9 billion.
Cash flow inflection. Operating cash flow reached a period high of $10,551 million in FY2025, up $1.1 billion, driven by favourable working-capital movement and improved operating results. Free cash flow rose to $7,186 million and conversion improved to 84% from 81%. But the trend across the period is a deliberate shift in the use of that cash: dividends paid have risen every year (from approximately $4.2 billion in FY2022 to $5.1 billion in FY2025) while treasury stock purchases have fallen sharply (from $3,896 million in FY2022 to $2,016 million in FY2025). Capital is being redirected from buybacks into unit growth. Total shareholder returns of $7,131 million in FY2025 were the lowest of the last three years despite record operating cash flow.
Leverage. Debt obligations rose from $38.4 billion to $40.0 billion in FY2025, but the Company attributes the increase primarily to exchange-rate effects on foreign-currency-denominated debt (which rose from $13.2 billion to $15.6 billion), not to incremental issuance. Net debt to approximate EBITDA has been stable in a 2.5x–2.9x band throughout the period. The debt stack is 97% fixed-rate with a 4.0% weighted-average rate — well-insulated against near-term rate movements, though the Company guides to a further 4–6% increase in interest expense in 2026 as maturing low-coupon paper refinances higher.
Financial Detail
Segment Revenue
| Segment revenue | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. — franchised revenues | 7163 | 7211 | 7371 |
U.S. — Company-operated sales | 3221 | 3197 | 3115 |
U.S. — total | 10384 | 10407 | 10487 |
IOM — franchised revenues | 6549 | 6746 | 7279 |
IOM — Company-operated sales | 5702 | 5713 | 6131 |
IOM — total | 12251 | 12458 | 13410 |
IDL&C — franchised revenues | 1724 | 1758 | 1898 |
IDL&C — Company-operated sales | 819 | 872 | 443 |
IDL&C — total | 2543 | 2630 | 2342 |
Other revenues (technology recharge and licensing) | 316 | 423 | 647 |
Total consolidated revenues | 25494 | 25920 | 26885 |
Segment Revenue
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. revenue YoY growth (%) | n/a | 0.2 | 0.8 |
IOM revenue YoY growth (%) | n/a | 1.7 | 7.6 |
IDL&C revenue YoY growth (%) | n/a | 3.4 | -11.0 |
U.S. share of total revenue (%) | 40.7 | 40.2 | 39.0 |
IOM share of total revenue (%) | 48.1 | 48.1 | 49.9 |
IDL&C share of total revenue (%) | 10.0 | 10.1 | 8.7 |
Other revenues share of total (%) | 1.2 | 1.6 | 2.4 |
Segment Revenue
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. operating income (USD M) | 5694 | 5733 | 5808 |
IOM operating income (USD M) | 5831 | 5946 | 6382 |
IDL&C operating income (USD M) | 121 | 33 | 203 |
Total operating income (USD M) | 11647 | 11712 | 12393 |
U.S. operating margin on segment revenue (%) | 54.8 | 55.1 | 55.4 |
IOM operating margin on segment revenue (%) | 47.6 | 47.7 | 47.6 |
Consolidated operating margin (%) | 45.7 | 45.2 | 46.1 |
U.S. share of total operating income (%) | 48.9 | 48.9 | 46.9 |
IOM share of total operating income (%) | 50.1 | 50.8 | 51.5 |
IDL&C share of total operating income (%) | 1.0 | 0.3 | 1.6 |
Segment Revenue
| Restaurant margin | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. franchised margin | 5877 | 5916 | 6078 |
U.S. Company-operated margin | 488 | 417 | 360 |
U.S. total restaurant margin | 6366 | 6334 | 6438 |
IOM franchised margin | 5379 | 5514 | 5954 |
IOM Company-operated margin | 995 | 948 | 1031 |
IOM total restaurant margin | 6374 | 6462 | 6985 |
IDL&C franchised margin | 1706 | 1748 | 1897 |
Total franchised margin | 12962 | 13178 | 13930 |
Total Company-operated margin | 1517 | 1447 | 1422 |
Total restaurant margin | 14479 | 14625 | 15351 |
Segment Revenue
| SG&A | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. | 661 | 654 | 653 |
IOM | 635 | 631 | 705 |
IDL&C (includes corporate office support) | 1521 | 1573 | 1682 |
Total SG&A | 2817 | 2858 | 3039 |
Incentive-based compensation within SG&A | 424 | 268 | 370 |
SG&A excluding incentive-based compensation | 2393 | 2591 | 2670 |
Segment Revenue
| Restaurants at year end | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. | 13457 | 13557 | 13706 |
IOM | 10263 | 10512 | 10845 |
IDL&C | 18102 | 19408 | 20805 |
Total | 41822 | 43477 | 45356 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Revenues from franchised restaurants (USD M) | 13085 | 14106 | 15437 | 15715 | 16548 |
Sales by Company-owned and operated restaurants (USD M) | 9787 | 8748 | 9742 | 9782 | 9690 |
Other revenues (USD M) | 350 | 328 | 316 | 423 | 647 |
Total revenues (USD M) | 23223 | 23183 | 25494 | 25920 | 26885 |
Gross margin, as reported by data aggregator (USD M) | 12580 | 13207 | 14563 | 14710 | 15434 |
Selling, general & administrative expenses (USD M) | 2708 | 2863 | 2817 | 2858 | 3039 |
Impairment and other charges/(gains), net (USD M) | -285 | 1010 | 362 | 291 | 229 |
Operating income (USD M) | 10356 | 9371 | 11647 | 11712 | 12393 |
Interest expense (USD M) | 1186 | 1207 | 1361 | 1506 | 1582 |
Income before provision for income taxes (USD M) | 9128 | 7825 | 10522 | 10345 | 10897 |
Provision for income taxes (USD M) | 1583 | 1648 | 2053 | 2121 | 2334 |
Net income (USD M) | 7545 | 6177 | 8469 | 8223 | 8563 |
Diluted EPS (USD) | 10.04 | 8.33 | 11.56 | 11.39 | 11.95 |
Non-GAAP diluted EPS (USD) | n/a | n/a | n/a | 11.72 | 12.20 |
Weighted-average diluted shares (millions) | 751.5 | 741.5 | 732.3 | 721.9 | 716.4 |
Dividends declared per share (USD) | 5.25 | 5.66 | 6.23 | 6.78 | 7.17 |
Effective tax rate (%) | 17.3 | 21.1 | 19.5 | 20.5 | 21.4 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Gross margin (%) | 54.2 | 57.0 | 57.1 | 56.8 | 57.4 |
Operating margin (%) | 44.6 | 40.4 | 45.7 | 45.2 | 46.1 |
Non-GAAP operating margin (%) | n/a | n/a | n/a | 46.3 | 46.9 |
EBITDA margin, approximate (%) | 53.0 | 49.5 | 53.6 | 53.3 | 54.3 |
Net margin (%) | 32.5 | 26.6 | 33.2 | 31.7 | 31.9 |
Franchised restaurant margin (%) | 82.2 | 83.3 | 84.0 | 83.9 | 84.2 |
Company-operated restaurant margin (%) | 17.8 | 15.6 | 15.6 | 14.8 | 14.7 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total revenue YoY growth (%) | n/a | -0.2 | 10.0 | 1.7 | 3.7 |
Constant-currency revenue growth (%) | n/a | n/a | 2.0 | 2.0 | 2.0 |
Systemwide sales (USD B) | 112.5 | n/a | n/a | n/a | 139.4 |
Global comparable sales growth (%) | n/a | n/a | 9.0 | -0.1 | 3.1 |
Total franchised sales (USD M) | n/a | n/a | 119750 | 120933 | 129675 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Cash and equivalents | 4709 | 2584 | 4579 | 1085 | 774 |
Accounts and notes receivable | 1872 | 2115 | 2488 | 2383 | 2466 |
Inventories | 56 | 52 | 53 | 56 | 61 |
Total current assets | 7149 | 5424 | 7986 | 4599 | 4163 |
Goodwill | 2783 | 2900 | 3040 | 3145 | 3354 |
Investments in and advances to affiliates | 1201 | 1065 | 1080 | 2710 | 2820 |
Operating lease right-of-use asset, net | 13552 | 11052 | 11724 | 11319 | 12438 |
Net property and equipment incl. finance lease ROU | 24721 | 25287 | 26698 | 27315 | 30409 |
Total assets | 53854 | 50436 | 56147 | 55182 | 59515 |
Short-term borrowings and current maturities | 0 | 0 | 2192 | 0 | 0 |
Accounts payable | 1007 | 980 | 1103 | 1029 | 1149 |
Total current liabilities | 4020 | 3802 | 6859 | 3861 | 4361 |
Long-term debt excluding current maturities | 35623 | 35904 | 37153 | 38424 | 39973 |
Total lease liabilities | 13727 | 12795 | 13746 | 13524 | 14840 |
Total liabilities | 58455 | 56439 | 60854 | 58980 | 61306 |
Retained earnings | 57535 | 59544 | 63480 | 66834 | 70282 |
Common stock in treasury, at cost | -67810 | -71624 | -74640 | -77376 | -79317 |
Total shareholders' equity/(deficit) | -4601 | -6003 | -4707 | -3797 | -1791 |
Total debt (short plus long term) | 35623 | 35904 | 39345 | 38424 | 39973 |
Net debt | 30914 | 33320 | 34766 | 37339 | 39199 |
Working capital | 3129 | 1622 | 1127 | 738 | -198 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Cash provided by operations | 9142 | 7387 | 9612 | 9447 | 10551 |
Capital expenditures | 2040 | 1899 | 2357 | 2775 | 3365 |
Free cash flow | 7102 | 5488 | 7255 | 6672 | 7186 |
Free cash flow conversion rate (%) | 94 | 89 | 86 | 81 | 84 |
Cash used for investing activities | 2166 | n/a | n/a | 5300 | 3822 |
Cash used for financing activities | n/a | 6580 | n/a | n/a | 7100 |
Dividends paid | n/a | 4168 | 4533 | 4870 | 5115 |
Treasury stock purchases | n/a | 3896 | 3105 | 2826 | 2016 |
Shares repurchased (millions) | n/a | n/a | 11.1 | 10.1 | 6.7 |
Total returned to shareholders | n/a | n/a | 7638 | 7696 | 7131 |
Shares outstanding at year end (millions) | n/a | n/a | 723 | 715 | 711 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Return on equity (%) | n/m | n/m | n/m | n/m | n/m |
Return on assets, year-end assets (%) | 14.0 | 12.2 | 15.1 | 14.9 | 14.4 |
After-tax ROIC, Company-disclosed (%) | n/a | n/a | 25.2 | 21.8 | 20.3 |
Current ratio (x) | 1.78 | 1.43 | 1.16 | 1.19 | 0.95 |
Debt to equity (x) | n/m | n/m | n/m | n/m | n/m |
Total debt as % of total capitalisation, Company-disclosed | n/a | n/a | 114 | 111 | 105 |
Net debt to EBITDA, approximate (x) | 2.5 | 2.9 | 2.5 | 2.7 | 2.7 |
Interest coverage, operating income over interest expense (x) | 8.7 | 7.8 | 8.6 | 7.8 | 7.8 |
Asset turnover, revenue over year-end assets (x) | 0.43 | 0.46 | 0.45 | 0.47 | 0.45 |
Cash provided by operations as % of total debt, Company-disclosed | n/a | n/a | 24 | 24 | 26 |
Fixed-rate debt as % of total debt | n/a | n/a | 96 | 96 | 97 |
Weighted-average annual interest rate on total debt (%) | n/a | n/a | 3.7 | 4.0 | 4.0 |
Foreign-currency-denominated debt as % of total debt | n/a | n/a | 38 | 34 | 39 |
Geographic Revenue
| Region | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
United States | 10384 | 10407 | 10487 |
International Operated Markets | 12251 | 12458 | 13410 |
International Developmental Licensed Markets and Corporate | 2543 | 2630 | 2342 |
Other revenues (not allocated by geography) | 316 | 423 | 647 |
Total | 25494 | 25920 | 26885 |
Geographic Revenue
| Growth metric | FY2024 | FY2025 |
|---|---|---|
U.S. revenue growth, reported | 0.2 | 0.8 |
U.S. franchised revenue growth, constant currency | 1.0 | 2.0 |
IOM revenue growth, reported | 1.7 | 7.6 |
IOM franchised revenue growth, constant currency | 3.0 | 5.0 |
IDL&C revenue growth, reported | 3.4 | -11.0 |
IDL&C franchised revenue growth, constant currency | 5.0 | 7.0 |
Geographic Revenue
| Segment | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. | 49914 | 50272 | 51946 |
International Operated Markets | 38264 | 39132 | 42440 |
International Developmental Licensed Markets | 31573 | 31529 | 35289 |
Total franchised sales | 119750 | 120933 | 129675 |
Geographic Revenue
| Ownership type | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Conventional franchised | 87809 | 88934 | 93761 |
Developmental licensed | 20045 | 19736 | 22451 |
Foreign affiliated | 11896 | 12263 | 13463 |
Total | 119750 | 120933 | 129675 |
Geographic Revenue
| Segment | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
U.S. | 8.7 | 0.2 | 2.1 |
International Operated Markets | 9.2 | -0.2 | 3.2 |
International Developmental Licensed Markets | 9.4 | -0.3 | 4.6 |
Total Company | 9.0 | -0.1 | 3.1 |
Geographic Revenue
| Segment | FY2024 reported | FY2025 reported | FY2024 constant currency | FY2025 constant currency |
|---|---|---|---|---|
U.S. | 1 | 3 | 1 | 3 |
International Operated Markets | 2 | 8 | 2 | 5 |
International Developmental Licensed Markets | 0 | 10 | 4 | 10 |
Total Company | 1 | 7 | 2 | 5 |
Geographic Revenue
| Currency exposure | FY2024 | FY2025 |
|---|---|---|
Australian Dollars | 1479 | 1771 |
British Pounds Sterling | 1149 | 1416 |
Polish Zloty | 636 | 820 |
China Renminbi | 334 | 501 |
Hong Kong Dollars | 226 | 289 |
Capital Markets
| Metric | Value | As of |
|---|---|---|
Share price (USD) | 274.43 | 14 August 2026 |
Share price (USD) | 275.69 | 12 August 2026 close |
52-week high (USD) | 341.75 | Trailing twelve months |
52-week low (USD) | 260.96 | Trailing twelve months |
All-time closing high (USD) | 336.88 | 27 February 2026 |
Market capitalisation (USD B) | 194.3 to 201.9 | 11 to 14 August 2026, sources differ |
Average daily volume (shares) | 4990000 | Trailing period |
Year-to-date share price change (%) | -11.1 | As of early August 2026 |
Capital Markets
| Index | 31 Dec 2020 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2025 |
|---|---|---|---|---|---|---|
McDonald's Corporation | 100 | 128 | 128 | 148 | 148 | 160 |
S&P 500 Index | 100 | 129 | 105 | 133 | 166 | 196 |
Dow Jones Industrials companies | 100 | 121 | 113 | 131 | 150 | 173 |
Capital Markets
| Metric | McDonald's | Basis |
|---|---|---|
Share price (USD) | 274.43 | 14 August 2026 |
Trailing P/E (x) | 22.4 | Reported by market data provider |
P/E on FY2025 GAAP diluted EPS of $11.95 (x) | 23.0 | Calculated |
P/E on FY2025 non-GAAP diluted EPS of $12.20 (x) | 22.5 | Calculated |
Dividend yield (%) | 2.67 | Reported; consistent with $7.44 annualised on $274.43 (2.71%) |
Market capitalisation (USD B) | 195 | Calculated on 710.4m shares |
Net debt (USD B) | 39.2 | FY2025 balance sheet |
Enterprise value, approximate (USD B) | 234 | Calculated |
EV / FY2025 revenue (x) | 8.7 | Calculated |
EV / FY2025 approximate EBITDA (x) | 16.0 | Calculated on approximately $14.6bn EBITDA |
Price / book (x) | n/m | Shareholders' equity is negative |
Free cash flow yield (%) | 3.7 | FY2025 FCF of $7,186m on approximately $195bn market capitalisation |
Capital Markets
| Source | Analysts | Consensus rating | Average price target (USD) | High (USD) | Low (USD) | Implied upside (%) |
|---|---|---|---|---|---|---|
S&P Global Market Intelligence (via stockanalysis.com) | 34 | Buy | 317.55 | 407 | 250 | 16.8 |
Investing.com | 31 | Buy (18 buy, 15 hold, 1 sell) | 320.58 | 407 | 250 | 17.9 |
ChartMill | 41 | 75% buy consensus | 337.13 | n/a | n/a | 27.6 |
24/7 Wall St. (proprietary) | n/a | Buy, 90% confidence | 317.22 | 346.59 | 292.51 | 15.7 |
24/7 Wall St. reported Street sentiment | 35 | 19 buy, 15 hold, 1 sell | n/a | n/a | n/a | n/a |
Capital Markets
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Dividends declared per share (USD) | 5.25 | 5.66 | 6.23 | 6.78 | 7.17 |
Dividends declared per share growth (%) | n/a | 7.8 | 10.1 | 8.8 | 5.8 |
Dividends paid (USD M) | n/a | 4168 | 4533 | 4870 | 5115 |
Payout ratio on GAAP diluted EPS (%) | 52.3 | 67.9 | 53.9 | 59.5 | 60.0 |
Payout ratio on free cash flow (%) | n/a | 76.0 | 62.5 | 73.0 | 71.2 |
Capital Markets
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Shares repurchased (millions) | 11.1 | 10.1 | 6.7 |
Treasury stock purchases (USD M) | 3105 | 2826 | 2016 |
Shares outstanding at year end (millions) | 723 | 715 | 711 |
Total returned to shareholders (USD M) | 7638 | 7696 | 7131 |
Capital Markets
| Agency | Long-term rating | Short-term / commercial paper rating | Outlook |
|---|---|---|---|
Standard & Poor's | BBB+ | A-2 | Not disclosed in the FY2025 10-K |
Moody's | Baa1 | P-2 | Not disclosed in the FY2025 10-K |
Fitch | Not disclosed | Not disclosed | Not disclosed — Fitch is not referenced in the FY2025 10-K, which names only S&P and Moody's |
Capital Markets
| Debt structure metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Total debt obligations (USD B) | 39.3 | 38.4 | 40.0 |
Fixed-rate debt as % of total debt | 96 | 96 | 97 |
Weighted-average annual interest rate on total debt (%) | 3.7 | 4.0 | 4.0 |
Foreign-currency-denominated debt as % of total debt | 38 | 34 | 39 |
Foreign-currency-denominated debt (USD B) | n/a | 13.2 | 15.6 |
Total debt as % of total capitalisation | 114 | 111 | 105 |
Cash provided by operations as % of total debt | 24 | 24 | 26 |
Analyst Conclusions
22.1 Management guidance and stated expectations
Full-year 2026 guidance was reaffirmed at Q1 2026. Management warned on the Q1 call of a significant Q2 comparable sales slowdown, which duly materialised (+1.3% global, +0.8% U.S.).
22.2 Consensus growth expectations
Consensus expects revenue growth of approximately 5.3% per annum on average over the next three years, versus a 9.0% forecast for the broader U.S. hospitality industry. Over the last three years earnings per share has increased approximately 4% per year while the share price has fallen approximately 1% per year. Consensus price targets cluster in the $317–338 range against a share price of approximately $274, with 31–41 analysts covering the stock and a rating distribution skewing toward Buy but with a substantial Hold contingent.
The first-half 2026 run-rate is instructive: H1 2026 revenue of $13,616 million against H1 2025 of approximately $12,166 million implies approximately 12% reported growth, but consolidated constant-currency revenue growth was 4% in Q1 and 2% in Q2. Currency is doing much of the work, and consensus for the full year embeds a meaningful deceleration in reported terms as comparisons harden.
22.3 Bull case
1. Unit growth is real, funded and accelerating, and the market is discounting it. The Company opened 2,276 restaurants in 2025 against 396 closures, plans approximately 2,600 gross openings and 2,100 net additions in 2026, and targets 50,000 units by end-2027 — which would be the fastest period of unit growth in Company history. Critically, more than 1,800 of the 2026 openings will be funded by developmental licensees and affiliates, meaning the Company captures royalty growth for approximately $750-restaurants' worth of its own capital. Net unit expansion alone contributes approximately 2.5% to constant-currency Systemwide sales growth — a floor beneath the comparable sales debate. IDL Systemwide sales grew 10% in constant currency in FY2025 with zero currency benefit.
2. Loyalty is a compounding, underappreciated asset with a hard deadline attached. Nearly 210 million 90-day active users across 70 markets generate over $38 billion of identified trailing-twelve-month sales. The targets — 250 million users and $45 billion of member sales by end-2027 — imply 19% user growth and 18% member-sales growth. Loyalty members visit more frequently by the Company's own account, and the dataset enables personalised value delivery that is margin-accretive relative to blanket discounting. Combined with the delivery target of moving 30% of delivery Systemwide sales in-app, the Company is building the mechanism to fix the very traffic problem the bears cite.
3. The margin structure is defensible and the balance sheet is under-levered relative to its stability. A 46.1% operating margin, 84.2% franchised margins, 97% fixed-rate debt at 4.0%, $12.98 billion of unused buyback authorisation and $10.3 billion of unused borrowing capacity give the Company more optionality than the share price implies. At approximately 22x earnings with a 2.7% yield and a 3.7% free cash flow yield, the stock is priced closer to a cyclical than to a business with 50 consecutive years of dividend increases and no covenant that accelerates on a downgrade.
22.4 Bear case
1. The U.S. business is not fixed, and the fix is running out of levers. U.S. comparable sales of +2.1% in FY2025 were explicitly attributed to average check — that is, price. U.S. guest counts were negative in Q2 2026 with comparable sales of just +0.8%, and press reporting indicates comparable sales turned negative in July 2026. Menu prices rose roughly 40% between 2019 and 2024, so further pricing is foreclosed; and traffic-buying via value has visibly failed to hold. The Company has already changed the U.S. president. If the July trend persists, the FY2026 U.S. segment will look more like FY2024 than FY2025.
2. The growth that exists is being bought with margin, and the evidence is on the balance sheet. U.S. Company-operated restaurant margin has fallen from $488 million to $360 million in two years — a 26% decline — with the CFO calling the level "unacceptable." Q2 2026 other SG&A rose 19%. FY2025 SG&A rose 6% in constant currency. The Company-operated estate is the honest read-through to franchisee economics, which are not separately disclosed; if the Company cannot make its own restaurants work at these value price points, franchisee willingness to fund the co-investment that the growth strategy requires becomes the binding constraint.
3. Reported growth is substantially currency, and the tailwind is a borrowed year. FY2025 currency translation added $385 million of revenue, $198 million of operating income and $0.16 of diluted EPS; excluding it, revenue grew 2% and operating income 4%. Q1 2026 EPS grew 7% reported but only 1% in constant currency, with $0.13 of the increase from currency. Management guides to a further $0.20–$0.30 currency benefit in 2026. When that reverses — and translation benefits always do — the underlying growth rate of a business compounding at 2% constant-currency revenue with rising interest expense, rising capex and a 71% free-cash-flow payout ratio becomes uncomfortably visible.
22.5 Catalysts and monitorables, next 12 months
22.6 Analyst verdict
McDonald's enters the second half of 2026 as a structurally excellent business having a poor year in its most important market, and the market is pricing the second fact more heavily than the first. That is not obviously wrong.
The structural case is intact and, in places, strengthening. Operating margin reached a five-year high of 46.1% in FY2025. Operating cash flow reached a record $10.6 billion. Unit growth is accelerating toward the fastest expansion in Company history, and the majority of it is funded by other people's capital. Franchised margins of 84.2% on a real-estate foundation the Company owns outright — 56% of land, 80% of buildings — remain the most durable competitive moat in the restaurant industry, and the reason McDonald's earns 46% operating margins where the closest listed comparable earns 29%. Fifty consecutive years of dividend increases and $12.98 billion of unused buyback authorisation are not the attributes of a business in trouble.
But the FY2025 recovery was thinner than the headline suggested, and the FY2026 evidence has been unkind. Strip out currency and FY2025 revenue grew 2% and operating income 4%. Strip out price and U.S. traffic was negative. Q2 2026 delivered global comparable sales of +1.3% against +3.8% a year earlier, with U.S. comparable sales of +0.8% on negative guest counts, and July is reported to have turned negative outright. The CEO's own diagnosis — "we don't have a strategy problem. We simply didn't execute" — is the confident answer, but replacing a U.S. president of more than six years is the action of a board that is not certain execution is the whole story. Meanwhile the Company's own restaurants are demonstrating that the value price points do not work at the unit level: U.S. Company-operated margin is down 26% in two years, and the CFO has said so publicly.
The honest reading is that McDonald's has traded margin for traffic and has so far received neither in full. The 2027 targets — 50,000 units, 250 million loyalty users, $45 billion of member sales — are ambitious, dated and, on current trajectory, mostly achievable; the unit and loyalty engines are working. What is not working is the U.S. consumer proposition, and no amount of international unit growth resolves a franchise system whose largest market is losing customers.
At approximately $274, roughly 22x earnings, a 2.7% yield and a 3.7% free cash flow yield, the shares are neither cheap nor demanding for a business of this quality. The five-year total return of 60% against 96% for the S&P 500, and against 73% for the Company's own compensation peer group, is the record. Hold, with the September Investor Day as the decision point. A credible U.S. traffic plan from new leadership, reaffirmed 2027 targets and an accelerated buyback would justify re-rating toward the $317–320 consensus. Confirmation that U.S. comparable sales have turned negative, combined with any further Company-operated margin erosion, would justify the low end of the target range near $250. The balance sheet, the dividend and the international engine mean the downside is bounded. The upside requires the American customer to come back.
Executive Leadership
| Name | Title | Tenure in role / with Company | Prior background |
|---|---|---|---|
Christopher Kempczinski | Chairman, President and Chief Executive Officer | CEO since November 2019; Chairman since May 2024; joined McDonald's 2015; age 57 | President, McDonald's USA (2017–2019); EVP Strategy, Business Development and Innovation, McDonald's (2015–2016); EVP Growth Initiatives and President, Kraft International, The Kraft Heinz Company (2014–2015); earlier PepsiCo and Procter & Gamble. Serves on the board of The Procter & Gamble Company. |
Ian Borden | Executive Vice President and Global Chief Financial Officer | CFO since 2022; approximately 30 years with the Company | Previously President, International; earlier CFO roles across McDonald's international markets |
Manu Steijaert | President, International Operated Markets | President IOM since May 2025; approximately 25 years with the Company | EVP and Global Chief Customer Officer; VP International Operated Markets (2019–2021); Managing Director, Netherlands (2015–2019); VP Operations, France; joined as a Field Service Consultant in Belgium in 2001 |
Skye Anderson | President, McDonald's USA | Appointed 4 August 2026; approximately 25 years with the Company | Chief Operating Officer, McDonald's USA immediately prior; previously President, Global Business Services |
Joe Erlinger | Former President, McDonald's USA | Held role from 2019/2021 until August 2026; 22 years with the Company | Departed as part of the U.S. leadership change announced with Q2 2026 results |
Jill (Gillian) McDonald | Executive Vice President and Global Chief Restaurant Experience Officer | In role since 2023; approximately 11 years with the Company | Previously President, International Operated Markets; earlier Halfords and Marks & Spencer |
Morgan Flatley | Executive Vice President, Global Chief Marketing Officer and New Business Ventures | In role since February 2023; approximately 8 years with the Company; age 52 | SVP Global CMO (2021–2023); SVP Chief Marketing and Digital Customer Experience Officer (2017–2021); earlier PepsiCo. Elected to the board of Constellation Brands in 2026. |
Tiffanie Boyd | Executive Vice President and Global Chief People Officer | Joined 2021 | Earlier General Mills |
Jon Banner | Executive Vice President and Global Chief Impact Officer | Joined 2023 | Earlier PepsiCo, ABC News |
Brian Rice | Global Chief Information Officer | Not disclosed in filings consulted | Technology leadership |
Warren Anderson | Global Chief Supply Chain Officer | Not disclosed in filings consulted | Signed the May 2026 climate statement jointly with Jon Banner |
Dario Baroni | President, International Developmental Licensed Markets | Not disclosed in filings consulted | Segment leadership |
Desiree Ralls-Morrison | Corporate Executive Vice President and Chief Legal Officer | Chief Legal Officer since 2022 | Earlier Boston Scientific, Johnson & Johnson |
Jeffrey J. Pochowicz | Vice President, Associate General Counsel and Corporate Secretary | Current | Signatory of the 2026 proxy notice |
| Director | Principal position | Age | Board tenure | Committees | Other public boards |
|---|---|---|---|---|---|
Anthony Capuano | President and CEO, Marriott International | 60 | 3 years | Compensation; Corporate Responsibility | Marriott International |
Kareem Daniel | Former Chairman, Disney Media & Entertainment Distribution | 51 | 3 years | Audit & Finance; Compensation | None |
Lloyd Dean | Chief Executive Emeritus and Founding Executive, CommonSpirit Health | 75 | 10 years | Compensation (Chair); Executive; Governance | Progyny; Surgery Partners |
Catherine Engelbert | Commissioner, WNBA; former CEO, Deloitte LLP | 61 | 6 years | Audit & Finance (Chair); Corporate Responsibility; Executive | Royalty Pharma |
James Farley, Jr. | President and CEO, Ford Motor Company | 63 | Under 1 year (elected February 2026) | Audit & Finance; Corporate Responsibility | Ford Motor Company; Harley-Davidson (not standing for re-election) |
Margaret Georgiadis | Co-Founder and CEO, Montai Therapeutics | 62 | 11 years | Audit & Finance; Governance | AppLovin |
Michael Hsu | Chairman and CEO, Kimberly-Clark Corporation | 61 | 2 years | Audit & Finance; Corporate Responsibility | Kimberly-Clark |
Christopher Kempczinski | Chairman, President and CEO, McDonald's Corporation | 57 | 6 years | Executive (Chair) | The Procter & Gamble Company |
Jennifer Taubert | EVP and Worldwide Chairman, Innovative Medicine, Johnson & Johnson | 62 | 3 years | Compensation; Corporate Responsibility | None |
Paul Walsh | Executive Chairman, McLaren Racing Limited; former CEO, Diageo | 70 | 7 years | Corporate Responsibility (Chair); Executive; Governance | FedEx; UPL Ltd. |
Amy Weaver | CEO, Direct Relief; former President and CFO, Salesforce | 59 | 3 years | Audit & Finance; Governance | None |
Miles White | Former Executive Chairman, Abbott Laboratories | 71 | 17 years | Governance (Chair); Compensation; Executive; Lead Independent Director | None |
| Governance metric | Detail |
|---|---|
Board size | 12 directors |
Independent directors | 11 of 12 (all except the CEO) |
Chair/CEO separation | Combined. Kempczinski has served as Chairman and CEO since May 2024, with Miles White as Lead Independent Director |
Directors joined since 2022 | 6 of 12 |
Women directors | 4 (per Illinois BCA 8.12 disclosure) |
Directors from underrepresented racial/ethnic groups | 3 (per Illinois BCA 8.12 disclosure) |
Standing committees | Audit & Finance; Compensation; Corporate Responsibility; Governance; Executive |
Committee independence | All independent except the Executive Committee, chaired by the CEO |
Board meetings in 2025 | 6 |
Committee meetings in 2025 | Audit & Finance 8; Compensation 4; Corporate Responsibility 4; Governance 6; Executive 0 |
Audit committee financial experts | Engelbert, Farley, Georgiadis, Hsu, Weaver |
Director election | Annual, majority voting standard in uncontested elections, with irrevocable resignation tendered in advance |
Anti-takeover provisions | No poison pill; no supermajority voting provisions; shareholders may call special meetings; proxy access available |
Director tenure limit | A tenure limitation applies to non-management directors (specific term not stated in the extract consulted) |
Outside board limits | Independent directors may serve on no more than three other public boards; the CEO on no more than one |
Hedging/pledging | Prohibited for directors and executives |
Shareholder engagement | Outreach conducted to holders of approximately 45% of outstanding shares since the 2025 annual meeting |
| Date | Change |
|---|---|
2022 | New committee chairs appointed for Audit & Finance (Engelbert), Public Policy & Strategy (Mulligan) and Sustainability & Corporate Responsibility (Walsh); Lloyd Dean named Compensation Committee Chair |
2022–2023 | Independent directors Robert Eckert, John Rogers, Jr. and Richard Lenny retired; Tony Capuano, Kareem Daniel, Jennifer Taubert and Amy Weaver elected |
May 2024 | Independent Chairman Enrique Hernandez, Jr. retired; Kempczinski elected Chairman; Miles White elected Lead Independent Director; Public Policy & Strategy Committee eliminated and its remit redistributed; Sustainability & Corporate Responsibility Committee renamed Corporate Responsibility Committee |
2024 | Michael Hsu elected as independent director |
May 2025 | John Mulligan retired from the Board; Manu Steijaert appointed President, International Operated Markets |
4 February 2026 | James Farley, Jr. elected to the Board; joined Audit & Finance and Corporate Responsibility Committees; Jennifer Taubert moved from Audit & Finance to Corporate Responsibility |
4 August 2026 | Skye Anderson appointed President, McDonald's USA, succeeding Joe Erlinger after a tenure of more than six years leading the division |
| Metric | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|
Salary | 1368833 | 1417500 | 1529167 | n/a |
Stock awards | 5750227 | 6500181 | 7500146 | n/a |
Option awards | 5750012 | 6500043 | 7500052 | n/a |
Non-equity incentive plan compensation | 4240878 | 4027620 | 854670 | n/a |
All other compensation | 660564 | 709657 | 811228 | n/a |
Total compensation | 17770514 | 19155001 | 18195263 | 20574525 |
| Executive | Year | Total compensation |
|---|---|---|
Ian Borden, EVP and Global CFO | 2024 | 6311630 |
Ian Borden, EVP and Global CFO | 2023 | 6805470 |
Ian Borden, EVP and Global CFO | 2022 | 7923087 |
Joseph Erlinger, President, McDonald's USA | 2024 | 6111365 |
| Element | Design | FY2025 outcome |
|---|---|---|
Short-Term Incentive Plan | Metrics: operating income growth; Systemwide sales; new restaurant openings; Strategic Scorecard (values, employee engagement, franchising strategy). Payouts capped at 200% of target. | Operating income and Systemwide sales results were below target; Corporate STIP payout factor for NEOs was 76.4% |
Performance-Based Restricted Stock Units (50% of LTI) | EPS growth (75%) and ROIC (25%) over a three-year performance period, modified ±25 points by relative TSR versus the S&P 500. Capped at 200%. | For PRSUs vesting in early 2026: ROIC above target; EPS growth and relative TSR both below target/median; 82.2% payout factor |
Stock options (50% of LTI) | Exercise price equal to grant-date price; 25% annual vesting; 10-year term | Value contingent on share price appreciation |
Practices not used | No employment agreements; no change-in-control agreements; no tax gross-ups on perquisites (other than standard relocation/expatriation); no option repricing or backdating; no hedging or pledging |
| Component | Amount (USD) |
|---|---|
Annual cash retainer | 120000 |
Annual grant of common stock equivalent units | 205000 |
Audit & Finance Committee Chair retainer | 30000 |
Compensation, Governance and Corporate Responsibility Committee Chair retainer | 25000 |
Annual charitable contribution match (increased by $5,000 effective 20 May 2025) | 15000 |
Additional Lead Independent Director retainer (Miles White, 2025) | 50000 |
| Holder | Shares (millions) | Ownership (%) | Approximate value (USD B) | Recent change |
|---|---|---|---|---|
The Vanguard Group | 71.0 | 9.95 | 22.3 | Added 914,000 shares (+1.3%) |
State Street Global Advisors | 34.8 | 4.88 | 10.9 | Added 272,000 shares (+0.8%) |
BlackRock | 34.5 | 4.83 | 10.8 | Cut 1.6 million shares (−4.4%) |
JP Morgan Asset Management | 23.6 | 3.31 | 7.4 | Cut 1.9 million shares (−7.5%) |
Geode Capital Management | 16.8 | 2.36 | 5.3 | Added 276,000 shares (+1.7%) |
Wellington Management | 9.0 | 1.26 | 2.8 | Reduced 2.9 million shares (−24.2%) |
Capital Research Global Investors | 6.9 | 0.96 | 2.2 | Reduced 1.9 million shares (−21.5%) |
Citadel Advisors | 2.66 | 0.37 | 0.78 | Increased approximately 5,000% |
D. E. Shaw | 0.62 | 0.09 | 0.18 | Increased by over 47,700% |
Balyasny Asset Management | 0.48 | 0.07 | 0.14 | Increased by over 19,000% |
Competitive Landscape
| Competitor | Primary overlap | Positioning relative to McDonald's |
|---|---|---|
Yum! Brands (KFC, Taco Bell, Pizza Hut, Habit Burger & Grill) | Chicken, Mexican-inspired, pizza; global franchising | The closest structural analogue: over 61,000 restaurants in more than 155 countries, asset-light franchising, and a proprietary digital platform (Byte by Yum!) directly analogous to McDonald's Restaurant platform ambition. Delivered 5% system sales growth and 3% unit growth in 2025 |
Restaurant Brands International (Burger King, Tim Hortons, Popeyes, Firehouse Subs) | Burgers, coffee, chicken | The most direct burger competitor. Approximately 30,000 locations. Consolidated system-wide sales grew 6.9% in Q3 2025 with comparable sales of 4.0%. Overtook Wendy's as the second-largest U.S. burger chain in August 2026 |
Starbucks | Coffee and beverages; breakfast daypart | The reference point for the McCafé and 2026 beverage platform. FY2025 (ended September 2025) revenue of $37.18 billion — larger than McDonald's reported revenue, though on a company-operated rather than franchised model |
Chick-fil-A | U.S. chicken; drive-thru throughput | Private. The most formidable U.S. competitor on throughput and guest satisfaction; the principal target of the McCrispy platform |
Subway | Sandwiches; global unit count | Private (Roark Capital). Historically the largest chain globally by unit count |
Wendy's | U.S. burgers | Improved margins on declining revenue in 2025 — a defensive posture. Lost second place in U.S. burgers to Burger King in August 2026 |
Chipotle Mexican Grill | U.S. fast casual | Formerly a McDonald's investment (1998–2006). The benchmark for premium fast-casual traffic and average check |
Domino's Pizza | Delivery-led QSR | One of the few chains that improved both revenue and margin in 2025 |
Jack in the Box | U.S. burgers | Improved margins on declining revenue in 2025 |
Shake Shack | Premium burgers | Improved both revenue and margin in 2025; competes at the Big Arch price tier |
Jollibee Foods Corporation | Asia-Pacific QSR | The dominant challenger in the Philippines and a growing international acquirer |
Local and regional operators | All markets | The Company explicitly names "international, national, regional and local retailers of traditional, fast casual and other food service competitors" |
| Metric | McDonald's FY2025 | Yum! Brands FY2025 | Starbucks FY2025 | Restaurant Brands International FY2024 |
|---|---|---|---|---|
Revenue (USD B) | 26.9 | 8.2 | 37.2 | 8.4 |
Revenue growth (%) | 3.7 | 8.8 | 2.8 | n/a |
Operating income (USD B) | 12.4 | n/a | n/a | 2.4 |
Operating margin (%) | 46.1 | n/a | n/a | 28.6 |
Net income (USD B) | 8.6 | n/a | n/a | 1.4 |
Net margin (%) | 31.9 | n/a | n/a | 16.7 |
Total assets (USD B) | 59.5 | n/a | n/a | 24.6 |
Restaurants (thousands) | 45.4 | 61.0 | n/a | 30.0 |
Systemwide sales (USD B) | 139.4 | n/a | n/a | n/a |
R&D intensity (% of revenue) | n/a | n/a | n/a | n/a |
Recent Developments
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