McDonald’s Q4 2025 Earnings Call - Accelerating store growth and a 'three for three' play (value, marketing, menu) is driving comp momentum

Conference Operator: Hello, and welcome to McDonald’s fourth quarter 2025 investor conference call. At the request of McDonald’s Corporation, this conference is being recorded. Following today’s presentation, there will be a question and answer session for investors. At that time, investors only may ask a question by pressing star one on their touchtone telephone. I would now like to turn the conference over to Mr. Dexter Congbalay, Vice President of Investor Relations for McDonald’s Corporation. Mr. Congbalay, you may begin.

Dexter Congbalay, Vice President of Investor Relations, McDonald’s Corporation: Good afternoon, everyone, and thank you for joining us. With me on the call today are Chairman and Chief Executive Officer, Chris Kempczinski, Chief Financial Officer, Ian Borden, and Chief Restaurant Experience Officer, Jill McDonald. As a reminder, the forward-looking statements in our earnings release and 8-K filing also apply to our comments on the call today. Both of those documents are available on our website, as are reconciliations of any non-GAAP financial measures mentioned on today’s call, along with their corresponding GAAP measures. Following prepared remarks this morning, we will take your questions. Please limit yourself to one question and then reenter the queue for any additional questions. Today’s conference call is being webcast and is also being recorded for replay on our website. Now I’ll turn it over to Chris.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Good afternoon, everyone, and thank you for joining us today. I want to start by recognizing the resilience and commitment of the McDonald’s system. Our franchisees, suppliers, and employees showed up for our customers and supported communities to close the year with strong momentum and a solid foundation heading into 2026. In 2025, McDonald’s delivered system-wide sales of nearly $140 billion, up 5.5% in constant currency for the full year. This reflects solid comp sales growth of more than 3% for the full year and over 5.5% in the fourth quarter, with strong growth across all segments. Our system-wide sales growth also reflects the benefit of our accelerating pace of new restaurant openings.

In 2025, we opened 2,275 restaurants on top of the more than 2,000 restaurants we opened in each of the prior two years, all while we’ve continued to see attractive returns from these new restaurants. Our pace of new store openings will accelerate further as we target approximately 2,600 gross restaurant openings in 2026, which keeps us on track to achieve 50,000 restaurants by the end of 2027. Despite a challenging industry backdrop, our system stayed agile throughout 2025 by concentrating on what we can control. As we look to 2026, success will again depend on going three for three. Compelling value that brings customers in the door, breakthrough marketing that creates meaningful moments for our fans, and menu innovation that provides great-tasting food for our customers.

We believe this disciplined focus enables McDonald’s to outperform in any environment. Let’s start with value. We’ve listened to customers and adjusted along the way with a relentless focus on delivering leadership in value and affordability, and our efforts are working. In the U.S., we launched McValue at the start of the year, which drove immediate incrementality, and then we relaunched Extra Value Meals in September. As we’ve said before, we’ll measure success of our EVM program in two ways: through our ability to gain share of low-income traffic and by improving value and affordability experience scores. I’m pleased to say that our EVM performance in the fourth quarter is exactly where we had hoped to be at this point. Together with McValue and exciting marketing, we gained share with low-income consumers in December, and we’ve seen a meaningful increase in our value and affordability scores.

Predictably, as U.S. franchisees provided these stronger value offerings throughout the year, their cash flow grew versus the prior year. In our big five international operated markets, we’ve offered everyday affordable price options, or EDAP, and menu bundles since early 2025. As awareness for these programs has grown, we’ve seen value and affordability scores steadily improve throughout the year, which also tell us they’re resonating with customers. As I’ve said before, and I will say again, McDonald’s is not going to get beat on value and affordability. It’s in our DNA, and we will remain agile to respond as appropriate to a dynamic, competitive landscape. That takes us to marketing. We once again activated in ways that reached far beyond our restaurants and into global culture in 2025.

The Minecraft movie collaboration was our largest global campaign ever, bringing together two iconic fandoms across more than 100 markets and 37,000 restaurants. Most recently, the Grinch returned after first debuting in Canada in 2024. The campaign, which came to life in several markets in 2025, drove extraordinary excitement, sparking sellouts and becoming a true holiday moment for millions of families. With the inclusion of Grinch-themed collectible socks in many markets, we were the largest seller of socks in the world for nearly a week. We sold about 50 million pairs globally across the first few days of the campaign. Both record-setting programs show how uniquely positioned McDonald’s is to tap into culture at massive scale, reinforcing the power of a One McDonald’s way of marketing and our ability to share creative excellence across the system. The last element of our trifecta is menu innovation.

We saw strong performance from the return of Snack Wraps in the U.S., the debut of McWings in Australia, and the introduction of the Big Arch in several markets, each resonating with different customer segments and bringing excitement to our menu. As we build what’s next, we’re grounding our work in a sharper focus on taste and quality, creating dishes that feel unmistakably McDonald’s and resonate with customers around the world. There is so much exciting work happening in this space. In a few minutes, Jill McDonald, our Chief Restaurant Experience Officer, which includes leading the global category management teams, will share more of what’s coming this year. I was recently in Australia and saw firsthand how they’re going three for three with value, marketing, and menu to win. Our close partnership with franchisees is driving strong momentum in the market.

It’s proof of what happens when you hit the mark on all three, driving strong business momentum and market share gains. With that, I’ll turn it over to Ian to talk through our 2025 results in more detail.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Thanks, Chris, and good afternoon, everyone. As Chris mentioned, I’m proud of what the McDonald’s system accomplished amid a challenging year for the industry. In the fourth quarter, we delivered strong comp sales, revenue, and earnings growth, while also driving improvements in overall customer satisfaction scores across our top 10 markets in aggregate. Specifically, in the fourth quarter, global comparable sales were up 5.7%, with positive comparable guest counts. In the U.S., comp sales for the quarter were up 6.8%, which was above our expectations and was driven by positive check and guest count growth. While some of the performance is attributable to easier prior year comparisons, it largely reflects the success of value, menu and marketing initiatives that supported steady improvement in our baseline momentum.

Together, these drove the highest quarterly comparable guest count gap to near-end competitors in recent history and set a solid foundation for 2026. Two marketing initiatives contributed to our strong performance. First, we kicked off the fourth quarter with Monopoly, which resulted in one of our largest digital customer acquisition events ever. Today, we have about 46 million 90-day active users in our U.S. loyalty app, and during the Monopoly event, we saw nearly 500 million games played. Second, we closed out the quarter with the Grinch Meal, which set new sales records, including the highest single sales day in our history. Overall, for the entire campaign, we sold nearly as many Grinch Meals as our highly successful 2025 Minecraft Movie Meal and 2024 Collector Cups promotions combined.

The Grinch Meal captured fans’ attention, a true testament to the power of the McDonald’s brand with the right marketing execution. In addition to these marketing events, as Chris mentioned, in early September, we relaunched Extra Value Meals to address customer value perceptions of our core menu offerings. In the fourth quarter, we increasingly saw evidence that this was working as intended. In addition to the improving trends in low-income share and value and affordability experience scores, the program drove improvements in units sold for our top EVMs, supported by the nationally price-pointed $5 Sausage, Egg, and Cheese McGriddles Meal and $8 10-piece Chicken McNuggets meal in November.

The momentum has continued in January behind the support of the nationally price-pointed $5 Sausage McMuffin with Egg Meal and $8 Two-Stack Wrap Meal, and we remain on track to achieve our targets for incremental traffic associated with the EVM relaunch. Turning to our international operated markets, comp sales were up 5.2% in the segment, marking a third consecutive quarter of comp growth above 4%, despite the challenging industry backdrop. Strong execution in the U.K., Germany, and Australia drove performance, with each market delivering comp sales growth in the mid to high single digits. Momentum behind McDonald’s U.K.’s turnaround continued in the fourth quarter, with market share gains for the first time in over a year behind the execution of several exciting promotions. As in the U.S., the Grinch campaign also exceeded expectations and featured McShaker Fries and special edition socks.

The Menu Heist campaign, which is the U.K.’s version of our popular Taste of the World promotion in other markets, showcased the global strength of the brand by offering customers a curated selection of international menu favorites at their local McDonald’s restaurant. This promotion delivered sustained strong performance through its six-week run, and given the success we’ve seen in the U.K. and other markets, we plan to expand it to even more markets in 2026. Germany and Australia also went three for three on executing value, menu, and marketing initiatives, resulting in share gains in each market in the fourth quarter. Both markets leveraged solid foundations and value offerings and capitalized on strong marketing campaigns.

Germany’s strong performance reflected the annual return of the Big Rösti, a large format burger, as well as a Friends TV show themed marketing campaign that was similar to a successful promotion in Spain just over a year ago, and which we also plan to expand to more international markets in 2026. In Australia, the breakfast daypart drove performance through menu innovations such as Matcha Lattes, the Brekkie Wrap, and McGriddles, while the highly successful Grinch promotion highlighted innovative menu offerings such as the Chicken Big Mac and McWings, and a special hotcake syrup sauce. Finally, in our international developmental licensed markets, comp sales for the quarter were up 4.5%, led by Japan, with all geographic regions reflecting comp sales growth... Japan’s performance has been consistently strong all year.

It was supported in the fourth quarter by the launch of the My McDonald’s Rewards loyalty program, marking a significant milestone in our global digital strategy. In China, although the market continued to face macroeconomic pressures, we maintained share in the quarter. In addition, we opened more than 1,000 restaurants in 2025 and now have a presence in every province. Turning to the P&L, adjusted earnings per share was $3.12 for the quarter, which includes a $0.10 benefit from foreign currency translation. Adjusted earnings per share on a constant currency basis increased 7% versus the prior year quarter, reflecting sales-driven margin contribution. Our total adjusted operating margin for the full year was 46.9%, in line with our expectations and reflecting the strength of our business model and the resilience of our system.

Total restaurant margin dollars were more than $15 billion for the year. As we look back on the full year, our capital expenditure spend was $3.4 billion, slightly above the high end of the range that we provided for the year, as we invested more toward our future year development pipeline, setting us up for success as we continue to increase our pace of openings in our wholly owned markets. I’m proud of what McDonald’s has been able to deliver in a challenging environment, and we believe that we are well positioned to deliver solid results in 2026. With that, let me hand it over to Jill.

Jill McDonald, Chief Restaurant Experience Officer, McDonald’s Corporation: Thanks, Ian, and good afternoon, everyone. I’m pleased to be here today to share more about the work of our restaurant experience teams and preview what’s coming in 2026. It’s been 9 months since we established the Global Restaurant Experience team, and when we announced this change, we noted that it would be significant for 2 reasons. First, our new integrated structure sets us up to execute with greater pace, which means ideas can start showing up in our restaurants even sooner. We can develop and scale product innovations faster than ever before, with menu, supply chain, and operations all in one team. And second, our new category structure, with dedicated leaders for beef, beverages, and chicken, would give us better accountability and a sharper line of sight into what it takes to win in each of these large and growing verticals.

We know that while value remains important for customers, delivering great taste and quality are their top needs, and that’s at the center of everything we’re doing across the restaurant experience. With that context, let me share more on each of the three categories. Starting with beef. We’ve continued rolling out Best Burger, which is now in more than 85 markets and on track to deliver on our commitment to be in nearly all markets by the end of 2026. Best Burger is the key to hotter, juicier, and even tastier burgers, which improve customer satisfaction scores and streamline operations for restaurant crew. We also began to pilot Big Arch about a year and a half ago, and it’s shown strong traction across several markets. Customers are responding to this delicious, more satisfying burger that meets their demand for something heartier while still feeling distinctly McDonald’s.

Its strong performance helped it most recently earn a permanent spot on the U.K. menu. We see potential to continue scaling this platform as we strengthen our position within this tier of the beef category. Now, let’s turn to beverages. We’re excited about the global beverage opportunity of more than $100 billion. You can expect to see new offerings in the U.S. as well as select international markets in 2026. Designed to capture share of this large and fast-growing category, we’re exploring energy, indulgent iced coffees, fruity refreshers, and crafted sodas. We’re thrilled to launch our new U.S. beverage lineup later this year under the McCafé brand. It builds on a highly successful test that exceeded expectations in the fourth quarter across more than 500 U.S. restaurants.

As we’ve said before, the new beverage offerings drove incremental occasions across different day parts, as well as higher average check, including strong results from our Red Bull collaboration, which we plan to continue building in both the U.S. and beyond. We’re applying learnings from the U.S. test as we expand offerings across the system. Australia, for example, ran a small beverage test at the end of 2025 and adapted those insights by refining some of the recipes and tailoring some of the flavor profiles to meet local preferences. Lastly, chicken. Just as a reminder, this global category is 2 times the size of beef and faster-growing.

We grew our chicken category share across our top 10 markets in 2025 and believe we’re well on our way to increasing our share by at least 1 percentage point by the end of 2026 versus where we were in December 2023. At the foundational level, we achieved our target of deploying the McCrispy sandwich equity to nearly all major markets by the end of 2025. On the innovation front, many of you have spotted something cooking at a few restaurants in the Chicagoland area. We’re in the early stages of testing new flavor combinations and new ways of cooking as we continue to explore great-tasting recipes for customers to enjoy. While I’ve shared how speed and scale show up across the three menu categories, innovation at McDonald’s doesn’t stop there.

The same disciplined approach is guiding the technology advancements coming to life in our restaurants, rounding out what it truly means to deliver the full McDonald’s restaurant experience. The restaurant experience team is using these tests to learn quickly and apply those learnings to capabilities like voice ordering, shift management tools, and other AI-enabled tools and digital enhancements that help make running great restaurants easier and more enjoyable for both crew and customers. Taken together, these efforts reflect how we are continuously innovating and improving the full scope of the McDonald’s experience, bringing forward even more delicious food, smarter operations, thoughtful design, and technology that meets customers and our restaurant teams where they are. It’s all part of how we’re modernizing the way McDonald’s shows up every day. And now I’ll turn it back over to Ian.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Thanks, Jill. As we look ahead to 2026, we remain confident in our strategy and our ability to outperform our competitors in any operating environment by focusing on what we can control and by leveraging our global scale and financial strength. We believe the underlying assumptions for our 2026 outlook are prudent and reflect our expectations that the QSR industry environments in the U.S. and across many markets will remain challenging. Should the environment improve beyond our expectations, we believe McDonald’s is well positioned to benefit disproportionately relative to our competitors. We expect that net restaurant expansion in 2026, along with restaurants we opened in 2025, will contribute approximately 2.5% to system-wide sales growth.

We expect our operating margin to be in the mid- to high-40% range and to expand from our 46.9% adjusted operating margin in 2025. We’re targeting G&A as a percentage of system-wide sales for the full year to be about 2.2%, reflecting our ongoing investments in our strategic growth drivers, like technology and digital, and global business services or GBS. These investments are designed to unlock efficiencies in running the business and to support long-term growth for our people and stakeholders.

Below the operating line, we expect interest expense to increase between 4%-6% from the prior year, primarily due to higher average interest rates, and expect our full year effective tax rate to be between 21% and 23%, with some volatility quarter to quarter that may cause the quarterly rate to be outside the annual range. We expect foreign currency to be a full year tailwind to 2026 EPS, totaling in the range of $0.20-$0.30 based on current exchange rates. As always, this is directional guidance only as rates will likely change as we move through the remainder of the year. Turning to capital allocation, we’re committed to maintaining financial discipline and creating value for our shareholders over the longer term. Our priorities remain unchanged.

First, we look to invest in the business to drive growth, including capital expenditures, to primarily support new restaurant openings, as well as investments in technology, digital, and GBS. Second, we prioritize our dividend, which has increased in each of the last 49 years. And third, we repurchase shares with remaining free cash flow over time. With respect to restaurant development and capital expenditures, as Chris mentioned, we continue to accelerate our pace of new unit openings and remain on track to achieve our target of 50,000 restaurants by the end of 2027. In 2025, we exceeded our openings plan for the year, with gross openings of about 2,275 restaurants and net openings of 1,880.

In 2026, we’re targeting approximately 2,600 gross restaurant openings, with about 750 of these in our US and IOM segments. We expect to open more than 1,800 restaurants in our IDL segment, including about 1,000 in China. Overall, we anticipate about 4.5% unit growth from the approximately 2,100 net restaurant additions in 2026. We expect our capital expenditure spend to be between $3.7 billion-$3.9 billion this year, with the majority invested in new unit openings across our US and IOM segments. This increase in CapEx versus the prior year of $3.4 billion is in line with the targeted increase of about $300 million-$500 million that we outlined at our December 2023 Investor Day.

Lastly, we’re targeting our net income to free cash flow conversion rate in 2026 to be in the low- to mid-80% range, which is in line with the 84% in 2025. With that, let me hand it back over to Chris.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Thanks, Ian. As we close the books in 2025, it’s only natural to reflect not just on the year that was, but on how far we’ve come since announcing Accelerating the Arches in November 2020 and expanding our ambitions in December 2023. We made bold commitments to grow our business. We’ve made great progress on our accelerator priorities, and we’ve become a fundamentally different company. You heard from Jill how that transformation is coming alive across the restaurant experience, from food, operations, design, and technology. When we started this journey, from a company standpoint, we didn’t have a global business services function. Today, we do. We didn’t have revenue growth management function. Now we do. We didn’t have a standardized global tech stack. Today, we’re close. The early benefits from these new capabilities gives us a clear line of sight into how they’ll unlock growth and productivity moving forward.

Loyalty is another great example. In November 2020, the McDonald’s loyalty app was just beginning to launch in the U.S. In 2023, we had about $20 billion in system-wide sales to loyalty members across 50 markets. In 2025, we almost doubled those sales, with nearly 210 million ninety-day active users across 70 markets, and we’re on track to reach our target of 250 million ninety-day active users by the end of 2027. This matters because we know that loyalty increases visit frequency and opens the door to new ways to engage with our fans, like multi-visit bonus games, such as the Snack Wraps campaign in the U.S., or exclusive partnerships available only through the app. Another critical proof is the connection between the app and the deployment of Ready on Arrival in our top six markets.

It’s already driving faster service, reducing wait times, and improving customer satisfaction, and we expect those benefits to compound as adoption grows across the system. These touch points simply didn’t exist a few years ago. When we execute, we know we can outperform the competition in any environment. What’s clear is that we’ve earned the right to look forward. We’re excited to share what’s next with our system at our worldwide convention in Las Vegas in June, and we expect to share more details with all of you during an investor update sometime this fall. Stay tuned. Before we turn to your questions, I want to again thank our franchisees, suppliers, restaurant teams, and everyone across the McDonald’s system for the commitment, the partnership, and the passion that you bring to this business.

Your dedication is the driving force behind our achievements and what enables us to pursue this next chapter with confidence as we transform our long-term ambitions into tangible results. With the new year well underway, we’ll continue to lead, innovate, and deliver for our customers, our people, and our shareholders. Together, we will make 2026 a year that defines the future of McDonald’s. With that, we’ll take your questions.

Conference Operator: Thank you. As a reminder, if you are an investor and would like to ask a question, please press star followed by the number 1 on your telephone keypad. We ask that you limit yourself to one question and re-queue for any additional questions.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Our first question today is from Dennis Geiger at UBS.

Dennis Geiger, Analyst, UBS: Thanks. Good afternoon, guys. Appreciate the insights, and Jill, very helpful to get an update from you as well. Chris and Ian, following a strong end to 2025, you both talked about a solid foundation into 2026. Could you talk a bit more on how you’re thinking about the U.S. sales trajectory in 2026, given some of those sales drivers you identified, and perhaps how you think about going three for three across value, marketing, and innovation to drive U.S. sales growth this year? Thank you.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Sure. I’ll start, and Ian, if you have any additional thoughts, but you know, let’s start with value. As I mentioned in the call, the U.S. put in place the McValue program that has performed well for us. We added to that, the EVM, toward the back half of the year. As we go into 2026, you know, McValue for us is gonna continue to be the foundation for our value program. It’s gonna be something that always continues to evolve. Joe has talked about that in the past. And you know, there’s real conversations, live conversations going on right now in the system, but I feel really good about where McValue is headed in this year.

And then I think also, you know, we’ve seen the power of great marketing. We’ve seen, you know, how something like a Minecraft or Monopoly or Grinch, when you have strong value with that, can really be an accelerant for the business. And I’m feeling good about the lineup that the U.S. team has there. And then, of course, we’ve talked about beverages. Jill also mentioned some of the other things that we’re doing with burgers and chicken. And so I think we’ve got a strong slate of menu news lined up for the year as well. So, you know, now it comes down to what I talked about also in the comments, which is it looks great on paper, we’ve just got to go execute.

But I think Joe and the team are working well with the franchisees. I know there’s a lot of energy and excitement around this, and so I’m confident we’re going to go out and execute with excellence.

And maybe, Dennis, just a couple of small builds to what Chris teed up. I mean, I think value and affordability, as we’ve talked about pretty consistently, are the greens fees. I mean, you’ve got to have it. It’s core to our DNA as a business and brand, and it’s certainly core to what consumers are expecting. And I think we would say we’ve done a pretty good job of kind of strengthening our value and affordability with the things that Chris talked about us putting in place. And that is certainly what we believe is one of kind of the underpinnings to the momentum that we’re seeing in our U.S. business.

We talked about the fact that in Q4, the U.S. had positive guest count growth, which is always a really strong indication that you’re kind of getting to that sustainable top line growth that is gonna drive both sales and more volume into the restaurants. I think just maybe something to note that I think is another important proof point is our U.S. business had its strongest comp guest count gap to the nearest in competitive set in Q4 in recent history. I think those are all signs of-

Ian Borden, Chief Financial Officer, McDonald’s Corporation: ... encouragement to us. The key, though, is you’ve got to get the three for three. It’s not just about value and affordability, or about menu, or about marketing individually. It’s how you bring those together and leverage them to kind of get that holistic output that you saw us, I believe, deliver in Q4. Our next question is from Sarah Senatore, Bank of America.

Sarah Senatore, Analyst, Bank of America: Oh, thank you. I guess maybe I wanted to sort of dig in a little further on that value. I know you kind of approached it two ways. One was sort of streamlining or systematizing the approach to the meals, you know, kind of that 15% discount to à la carte prices. Then you also pulled some very sharp price points, as you said, the $5 and $8. So as you think about the pricing architecture, I guess, which of those do you think was more powerful? Because I’m asking in the context of restaurant-level margins that, you know, were sort of flattish year-over-year. And so, you know, assuming maybe there’s some kind of pressure from that on franchising margins.

And maybe just tacking on to that, are any of the technology solutions that Jill mentioned, those some of the ways to kind of maybe support this sharper value? Thank you.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Sure. Well, I guess I’d say, you know, I don’t think it’s one or the other. I think what we’ve seen, and certainly what we’re trying to execute, is the customer absolutely wants predictable value, and having an EVM is, I think, the, you know, way historically we have always delivered for that customer, that predictable everyday value. So you need to have that and certainly pleased with where the system in the U.S. was able to get to on that. As you well know, it’s something that has been well established on our international business for years, and so we’re in a good shape there as well. But then also the customer is looking for, in this environment, some price-pointed items that are, you know, offering particular value on top of that.

So I think you’ve got to be able to have the predictable value, but the customer also needs to be excited around, you know, price-pointed items that come in and out of the menu, and that’s what we executed against. Maybe, Sarah, just to kind of hook on to Chris, because I know you’d highlighted kind of margin pressure. I just—I think if you kind of go back to what we’ve talked pretty consistently about what it takes to grow margins, obviously, is strong top-line sales growth. We saw that in Q4. We grew margins in Q4, including in the U.S., on the back of that. Obviously, if you look back to earlier quarters, we had less top-line growth in the U.S., combined with obviously higher levels of inflation.

I think that would that put more pressure on that. I think the other data point, it’s a little bit to what Chris highlighted, which is you got to do both. I mean, at the end of the day, our owner operator average cash flow in the US was up year-over-year. And I think as we’ve talked about historically, the way you get to sustainable profitability and profitability growth is you drive more volume, more customers into restaurants. And I think if we get that three for three formula right, as we’ve done in Q4, I think you’ve seen that we’re clearly capable to do that and do that well. Next question is from Brian Harbour, Morgan Stanley.

Brian Harbour, Analyst, Morgan Stanley: Yeah, thanks. Good afternoon, guys. I wanted to ask about just the, the capital budget. You know, I think it, it’s generally run kind of at the higher end of, I think, where you thought it would a couple of years ago. It’ll, you know, probably end up being up by $1.5 billion versus 2023. Is, is that, you know, is that exclusively because you, you know, you want to move faster on, on constructing new stores, or is there, you know, some other piece of that we don’t see? And I, I think, you know, it’s interesting, just even in markets with not much population growth, you’re, you’re, pushing, you know, pretty hard on unit growth.

Is that a function of, you know, you think because the industry is under stress, this is the time when you should really be taking market share and trying to secure new sites, to because you think the share opportunities are greater today? Is that the main driver?

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Yeah. Hi, Brian, it’s Ian. Let me take that one. Well, I, I’d start just kind of going back to what we outlined in our December 2023 Investor Day event, and we said there we expected our capital budget to go up basically $300 million-$500 million every year consistently as we got to our run rate of 1,000 gross openings in our wholly owned markets in 2027. And we’ve basically been fully on track to that every year. We were slightly above that range in 2025, at $3.4 billion of capital for the year. But that was driven by two things: some kind of FX headwinds from a weaker US dollar and us being a little bit ahead of our future opening pipeline, so more spend related to 2026 and 2027 openings.

So it was, it was a healthy, let’s call it, adjustment. As you would have seen in our guidance, again, in 2026, we expect the capital to go up another $300 million-$500 million. So again, consistently in that range. You know, we did, as we talked about before, a lot of work before we kind of committed to where we thought we wanted to be at 50,000 units by end of 2027, in 2023, to really get deep on where we felt the gaps in trading areas, where we felt the opportunities were. And as you know, we’ve used the U.S. as an example before, which is one of our, you know, more mature, fairly penetrated markets, but a market where we hadn’t grown net units since 2014, I think, until basically 2022, 2023.

A market where there’s been a lot of population migration over time, where our openings have not kept up. And so-

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: ... I think the ultimate measure is, are we getting the first year sales in those new sites? Are we getting the returns that we expect? And the answer to both of those questions is yes, and that is confirmatory to the fact that we’re getting the right sites in the right places, and building the brand in a very healthy way.

Conference Operator: Next question is from Dave Palmer at Evercore.

Dave Palmer, Analyst, Evercore: Yeah, thanks. Good afternoon. I’m just trying to think about how I want to ask this question about what feels like picking up in momentum, but also a picking up in your pipeline of ideas that you have going at the same time. You know, beverages is one example where you’ve tested something, you’re coming out and you’re confident that you have it and it will work. You know, it sounds like you’re testing stuff with chicken. It sounds like maybe earlier days there, I’m not sure there. Even on value, feels like that’s something where you’re continuing to refine as you’re getting momentum.

So, you know, like a lot of companies coming out of COVID, there was a little bit of just a disruption during that period and adjustment, and now you’re kind of getting your footing in terms of the pipeline. So maybe, I don’t know, that’s an open-ended question, if maybe you want to comment on that, and then maybe even stuff that are more foundational beyond just even the tech stack, if you’re thinking about things in terms of kitchen and other, that might be things that we can think about for the future. Thank you.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Yeah, thanks for the question. You know, I, I would say, if you think about the company today and, and frankly, the world that we’re operating in, it’s just, it’s, it’s a very, we’re at a very different starting point. And, I went through a number of the things that we’ve done from a company standpoint with Accelerating the Arches, that I think put us in a very different place today. When you have, you know, what will be 250 million consumers, 90-day actives on your loyalty platform, that opens up a whole different way of engagement with your customers than what we had when we began that journey back in 2020.

When you have the ability to get every market onto a common tech stack, our ability to move with speed and to deploy solutions gets increased by factors of, you know, significant numbers. And, and so we’ve been trying to spend some time to just think about, with these new capabilities, how do we actually start to bring those to market in a way that makes a meaningful difference on both the top line, but also on the productivity side? And, and I think at the same point, you know, if you go back to where we were in 2020 or even 2023, nobody was talking really about AI. Certainly, we weren’t talking a whole lot about AI. There was not, you know, some of the commentary and, and thoughts around, you know, what does GLP-1 do in the industry? What are the impacts of that?

We’re, we’re certainly leaning into all of those things and thinking about all those things and making sure that we’re ahead of the curve, that we’re seeing around corners and keeping this brand positioned at front. So what Jill is laying out, you know, we’re testing a ton of ideas, and I would say also in the restaurants that we’ve got, they’re different at each restaurant. It’s not the same thing in each restaurant. And, you know, we’re excited about sharing more of what we’re learning with our system, which we’ll do in Las Vegas. And then you’ll hear more from us, as I mentioned, in the fall, where we bring to life what we think is what’s next for McDonald’s.

Jill McDonald, Chief Restaurant Experience Officer, McDonald’s Corporation: Just perhaps to build on that, we’ve introduced, as I said, upfront, the new category management structure, which, we’re pleased with the progress that we’ve made in the first nine months, and that really is helping to focus the organization. We’re bringing together, operations, supply chain, menu, marketing around the table together to work, in concert to move at greater pace. We can certainly see consumers are reacting well to new news, as evidenced by the beverage test that we ran earlier in 2025 in the U.S. We’re seeing early benefits from moving with pace, and I think, but one part, but an important part, has been the introduction of category management.

Conference Operator: Next question is from John Ivankoe of JP Morgan.

Brian Harbour, Analyst, Morgan Stanley1: Hi, thank you. You know, so it, it’s certainly an admirable, you know, goal to have taste and quality, you know, as metrics that you want to improve or at least, you know, kind of pursue for the McDonald’s brand. But my question was really, you know, what kind of changes that might have to happen within the kitchen itself, you know, to maybe achieve some of these goals, both in the near term, you know, and the medium and longer term? In other words, you know, is there equipment, technology, layout that may have to, you know, really be changed in a fairly significant way to maybe achieve some of the taste and quality goals?

You know, I do ask this question in my travel, you know, seeing some, you know, stores in France, for example, that had very different equipment and a very different layout than the McDonald’s that I’m used to seeing. You know, what I’m really asking is, is there something like, and I don’t know what to call it, an experience of the future version two, that might be part of the plan in the next couple of years?

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Thanks for the question, John. One of the benefits of being in 150 different countries is we’ve got innovation going all over the system, and I’d say when we think about moving the needle on taste and quality, we’re going in without any kind of preconceived notions. We’re not going in with any constraints. We’re just, you know, the challenge to the team is: how do we continue to, you know, make further improvements around taste and quality, recognizing that the competitive set is raising the bar on that. And so, that’s some of what Jill and the team are testing. As to how that impacts the restaurant, you know, we don’t have the answer right now, but I think as you all are aware, you know, we’re heading into a remodel cycle.

EOTF is, as hard as it is to believe, the EOTF process in the U.S. is now almost a decade ago that we began on that. It was even longer in some of our IOM markets. And so we’re in a natural cadence where, you know, our system historically does do remodels around every 10 years or so. And so let’s just make sure as we go into this remodel cycle, that we’re doing it mindful of how do we continue to come up with ideas that are gonna drive the business, and we think taste and quality is certainly one of the biggest opportunities for us. Jill, pass it over to you.

Jill McDonald, Chief Restaurant Experience Officer, McDonald’s Corporation: Sure. So, Chris has outlined some of the sort of the early thinking on, you know, where can we innovate going forward to make sure that our restaurants are set up to grow where we’ve identified growth opportunities, chicken, there’s plenty of growth still in, in beef as well as the, the new areas of, of beverage. But we’re also thinking about improving taste and quality around how we renovate today as well. So, you know, how do we, you know, help the restaurants execute to the gold standards that we have today as well? So we’re kind of really thinking about this in, in a couple of different time frames. What we can do today and how do we get ready for, for the future.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Next question is from David Tarantino at Baird.

David Tarantino, Analyst, Baird: Hi, hi, good afternoon. I had a couple questions back on the U.S. value strategy, Chris, and I was wondering if you could comment on how franchisees in the U.S. are embracing the strategy, and really two parts to that. You know, one, you know, some of the strategies you’ve had have required McDonald’s to support that financially. You know, what’s the current sentiment in the system on extending that without McDonald’s support? And then the second question, perhaps more importantly, is I think you’ve rolled out some new brand standards, and I was hoping you could comment on what that might mean for the pricing strategy on the core menu going forward. It seems like, you know, keeping price points as you know low and price increases, you know, perhaps at or below inflation is important.

Just wondering if you can, you know, provide some insights on, on how the system’s thinking about that equation.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Sure. Well, I, I’d say certainly, you know, in my travels, and, I was just with some operators in Dallas, earlier this week, that, you know, there’s good enthusiasm for where the business is at. Certainly, finishing the year as they did in the U.S., is great, kind of heading into the new year. And so when cash flows up, when there’s business momentum, I think all of those things, work toward having positive sentiment, particularly in an environment right now where, you know, our performance relative to what, you know, we see some from some others, I think our franchisees are, understanding or appreciative of, you know, it’s not easy out there, and we’re certainly pleased with our performance.

You know, as to how that continues to evolve, you’re right, our support for EVMs rolls off. In many cases, it’s already rolled off in some places. But I think our system generally looks at business results, and I think the numbers are pretty clear that the EVM strategy for us is working. And you know, I would expect that you know, anybody who’s looking at the data, it’s a pretty easy conclusion as to what you would do with that. But ultimately, our support, as we’ve talked about a number of times, it’s timely, targeted, and temporary. We don’t subsidize pricing on a permanent basis, and so I think you know, with how we’ve worked together as a system over the last quarter, now heading into two quarters, I think the pathway forward is pretty clear.

But ultimately, that’s gonna be up to franchisees on that. And then to your question around brand standards, I mean, just to reiterate, or state the obvious, franchisees set pricing. But at the end of the day, we are the custodians of the McDonald’s brand. That is what we’re selling, and one of the things that’s core to our brand is our value positioning. And so we don’t prescribe exactly how the franchisees have to go deliver value, but the franchisees need to protect the brand, and part of that brand DNA is our value leadership that we have there. And so there’s lots of different ways. We provide support to franchisees through RGM, this Revenue Growth Management, on different ways to go do it.

The expectation is that however franchisees decide to align against it, they’re gonna continue to live up to what, you know, Ray Kroc started with this brand, which was one of the world’s great brands that also continued to lead on value. Next question is from Greg Francfort over at Guggenheim.

Greg Francfort, Analyst, Guggenheim: Hey, thanks for the question. I guess I had two questions. One, you made a comment about customers increasing their frequency on the loyalty program. Do you have a sense for how much of a needle mover that is? And then just the second part of that is, I think you also made a comment about the accelerating the global tech stack and being almost where you wanna be. What are the remaining hurdles to getting that done? Thank you.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: I’ll let Ian take both of those, and if he flubs it, I’ll jump in.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Vote of confidence.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Yeah, vote of confidence. Teamwork.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Greg, let me try and take those. So I think on the loyalty program, I’d go back again.

... to just emphasize that when we laid out in Investor Day, December 2023, loyalty membership, you’ll remember, we laid out a metric of getting to 250 million ninety-day active users by end of 2027. We said in our upfront remarks, we’re now at 210 million ninety-day active users, well on our way and confident to get to that 2027 goal. And we have said that loyalty, active loyalty membership is our single most important digital metric because it, when we get consumers into our loyalty program, they visit more often and they spend more over time, and they interact with us more frequently, so they get more value in their interaction with us, and we get more value by them interacting with us.

And I think we have a lineup of a pipeline of ideas on how we’re going to continue to build and add capability that will add further value to our loyalty customers as we look forward. It, to kind of get to your question more specifically, and we gave this data point, I think, a quarter or 2 ago. If you look at our U.S. business as an example, a customer in the 12 months—an average customer in the 12 months before they joined our loyalty program, visited us 10.5 times. In the 12 months after they became a loyalty member, they visited us 26 times. So we increased their frequency of visit by more than 2.5 times, and they also spend more with us over time.

That’s why loyalty is important, and that’s why we’re excited to kind of continue creating value so that consumers will be compelled to join and compelled to continue to interact with us on a more frequent basis. I think on the tech stack, I think, you know, we’ve been pretty open over time. I mean, to go from a fragmented, decentralized kind of tech organization to common platforms, and you’ll remember in, again, in our Investor Day in 2023, we laid out, we want to get to three common platforms in our business that are tech-enabled through a common tech backbone, so to speak. That’s our consumer platform, our restaurant platform, and our company platform. We’re making progress against each of those three.

We’ve got a little more work to do, as Chris alluded to, but we feel really confident in where we’re at and, and the pace of what’s left to go to kind of get us to that overall outcome. Next question is from Andy Barish over at Jefferies.

Andy Barish, Analyst, Jefferies: Yeah, good evening, guys. Wondering if we go back to the beverage efforts in the U.S., and kind of interesting that you did not mention CosMc’s. That seems to be a shift and any, you know, any color you’re willing to provide just in terms of the rollout as we look towards the rest of this year.

Jill McDonald, Chief Restaurant Experience Officer, McDonald’s Corporation: Sure. I’ll, I’ll take that, that question. So, we are obviously really excited about the beverage launch in the U.S. later this year, and we are going to do it under the McCafé brand. So we obviously learned a lot through the CosMc’s test, and those learnings have been applied to how we’ve decided to set up this new beverage range, but we are going to be launching under the, under the McCafé brand. And just to give you a little bit more, more color, you know, the results did exceed expectations for the entirety of the program. It did drive incremental occasions. These were mostly snack, dinner, and evening, and we also saw higher average checks. So the financials are really playing out, playing out well. We learned a lot about the recipes.

We offered a range of recipes across indulgent coffees, refreshers, energy, and sodas, crafted sodas. All did well, particularly the crafted sodas, refreshers, and energy. And we’re going to do what we do best at McDonald’s. We are going to offer great tasting products, great prices with the speed and convenience that our customers want and expect. So, more to come on that. We’re not going to reveal too many more specifics or the timing, but you can expect to see news in the U.S. and outside of the U.S., too.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Next question from Lauren Silberman at Deutsche Bank.

Brian Harbour, Analyst, Morgan Stanley2: Thank you very much. Great quarter, strong acceleration across segments on a two-year basis. As we look to 2026, we still have a lot of dynamics in the consumer environment. Sounds like you have a really strong playbook. Can you give any color on how we should be thinking about, I guess, Q1, knowing there’s some weather there, still have a little bit of the E. coli lap, and then thoughts on the same-store sales progression as we move through 2026? Thank you.

Ian Borden, Chief Financial Officer, McDonald’s Corporation: Hey, Lauren, it’s Ian. Let me take a crack at that, then I’m sure, Chris will add on here. Look, I think, as we’ve, as we’ve talked about already, we feel really good about the underlying momentum and kind of the consistency of that across each of the three operating segments. I think we expect that momentum to kind of continue in 2026. And obviously, what we’re focused on, and we’ve talked about a lot, is really going three for three, focusing on the things that are within our control. I think we expect probably that the first half will be likely a little stronger than the second half, and that’s just largely a reflection of kind of the benefit of the favorable year-over-year comparisons that we’re up against.

Maybe just to give a little color by segment. I think for the US, you know, we’ve had a solid start in January. We had good kind of underlying momentum, as you’ve heard us talk about today, supported by, I think, what we’ve done with Extra Value Meals, obviously, McValue, more broadly. I think we would say we expect Q1 comp sales growth to decelerate sequentially from the 6.8% in Q4 that you saw. I think there are two key reasons for that. One is Q4 growth was particularly strong, obviously driven by two really strong activations in Monopoly and Grinch.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: ... and then as is well known, you’ve heard from many others, obviously, we had severe weather impacts in the U.S., kind of beginning in late January, that pressured the industry traffic, pressured our traffic, obviously, and caused quite a few restaurants to close or reduce hours for a number of days. We estimate that weather impact to be about 100 basis points for the full quarter, just when you look at kind of the drag that we saw in January. I think on international, kind of a similar story. I mean, we had a solid start in IOM in January. Again, we believe we’ve got kind of strong and consistent underlying momentum, but we do expect Q1 to decelerate sequentially from the 5.2% that we had in IOM in Q4.

Again, we’ve got some weather, I would say, impacts in a number of markets in Europe through January that have put a little bit of pressure kind of on the underlying momentum. And then IDL, again, expect a sequential decrease from the 4.5% that we had in Q4. Again, we feel pretty good about the underlying momentum. That’s really just driven by, I would say, the kind of continued macro pressures in markets like China, and parts of Latin America. So I think, you know, we’re really confident about what’s within our control, really confident about the underlying momentum of the business, and certainly feel good about our ability to continue to kinda execute well, even though the environment remains challenging. Next question is from John Tower over at Citi.

Conference Operator: Great. Thanks for taking the question. Maybe, Jill, one for you. I was hoping, you know, you went through a lot of the menu ideas coming in 2026 across the globe and in the U.S. Specifically in the U.S., though, I was hoping you could drill a little bit more into how you’re thinking around the GLP-1 adoption, likely picking up this year with orals being available and how you’re thinking through the menu. Operators across your system actually asking you, you know, how McDonald’s is going to potentially address this shift in consumption?

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Sure. Well, let me start and then I’ll let Jill fill in. But, as I mentioned in my comments earlier, we’re certainly spending a lot of time and paying close attention to it. I can tell you right now, you know, we’ve looked pretty hard, and we don’t yet see evidence of it really having a material impact on our business. Now, that said, as you noted, a pill form has just become available. We know the pill form has had pretty strong adoption in the early weeks. Lilly will come out with a pill form of their own sometime in probably Q1, Q2. And so, certainly our view is that adoption is gonna continue to grow. And as adoption grows, you know, we know that consumers’ behavior changes.

We know that in, in general, they eat fewer calories in the day, but also what they eat, the mix of that changes. Fortunately for us, protein is one of the areas that this consumer, the GLP-1 consumer, is still very much interested in, and we’ve got, you know, a great protein offering on our menu. So I think that’s an area of strength for us. But we’re also seeing changes around, you know, maybe less snacking, changes in some of the beverages that they drink, less sugary drinks. And so all of those things are factoring into some of what we’re out there experimenting with and testing with. And ultimately, as we learn more about that and get feedback from our customers, you know, those things could make their way onto the menu.

But, Jill, I’ll let you kind of pick it up from there.

Jill McDonald, Chief Restaurant Experience Officer, McDonald’s Corporation: Sure. You know, we, we do have a history of staying close to customers and innovating and adapting our menu as required. So, you know, we are already pretty protein forward. You know, fish, chicken strips, Snack Wraps, sausage biscuit. We have a number of items on the menu that, that, customers who are on GLP-1 are enjoying. I think we can call out and just help customers a little bit more understand what, what is high protein on our menu, because there are a number of options. But we’re also gonna continue to, you know, learn, see what’s gonna interest them. We have a couple of ideas that we are already looking at for the longer term.

So we’ll be led by the customers and what they want from us, but there’s plenty for them to enjoy on our menu currently.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Our last question today is from Jeff Bernstein over at Barclays.

Jeff Bernstein, Analyst, Barclays: Great. Thank you very much. Just trying to get a sense for the barbell strategy. We talked a lot about value, so I was hoping, at least in the US, you could share some color on the scores you’re seeing, the maybe the share of value or mix of sales. Just trying to get a sense for where value sits and your comfort level there. And on the flip side, obviously, a lot less talk these days about the premium offer positioning, but how do we think about the balance there? Obviously, franchisees would love to push, as would you, I’m sure, the upper end of that barbell. So what do we have on tap, or how do you feel about your ability to push more premium product offerings as we move through 2026 to balance with that value? Thank you.

Chris Kempczinski, Chairman and Chief Executive Officer, McDonald’s Corporation: Sure. Well, we’ve talked about on prior calls the fact that industry-wide, you know, we’ve seen traffic hold up pretty well, with upper-income consumers, and traffic has been pressured, with lower-income consumers. Of course, lower-income consumers are more value and affordability sensitive. We were pleased to see that we gained share, with that low-income consumer, in December, which, you know, was very much one of the criteria that we set around, our value program. So obviously, we’ve got to continue that. But, you know, I think we’re in a better position, certainly, with that part of the consumer cohort. Then on the premium side, you know, we’re gonna have menu innovation, that I think is gonna continue to appeal to, the upper-income consumers.

I think some of the beverage items could clearly go in that category. I think some of what we might be able to do in chicken and burgers as well could fit under that. So you know, we’re a business where 90% of the customers are coming into our restaurant in the US at least once a year, and we need to make sure that we’ve got a broad offering that appeals to all of them and recognizes that they have different needs. So I think we’ve got a good strategy on that, but certainly, the expectation for the balance of 2026 is that the low-income consumer is gonna continue to be under pressure, and there should be, you know, call it mid-single-digit growth available with the upper-income consumer.

How do we make sure we’re winning with both of them? Thanks, everybody, for joining the call. If you want any types of follow-ups, please send me an email. We can get something scheduled. Other than that, have a good evening, and we’ll talk to you later.

Conference Operator: This concludes McDonald’s Corporation investor call. You may now disconnect and have a great day.