McDonald's Corporation (MCD)

Business

From the FY2025 10-K, accession 0000063908-26-000035.

What it is. McDonald's franchises, owns and operates McDonald's restaurants serving a locally relevant menu in more than 100 countries. At year-end 2025 there were 45,356 restaurants, approximately 95% franchised. The Company refers to itself plus its franchisees and suppliers collectively as the "System."

Segments. Three reporting segments:

• U.S., the largest single market; 13,706 restaurants at year-end 2025; 95% franchised.
• International Operated Markets (IOM), markets where the Company owns, operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, Poland, Spain and the U.K.; 10,845 restaurants; 89% franchised.
• International Developmental Licensed Markets & Corporate (IDL), over 75 countries operated by developmental licensees and affiliates (including equity-method investments in China and Japan), plus Corporate activities; 20,805 restaurants; 99% franchised.

How it makes money. Revenues are (i) fees from franchised restaurants and (ii) sales at Company-owned and operated restaurants, plus Other revenues. Three franchise structures:

• Conventional franchise, the Company generally owns or holds a long-term lease on the land and building; the franchisee funds equipment, signs, seating and décor. The Company collects rent and royalties as a percent of sales with specified minimum rent payments, plus initial fees. Franchise/license agreements generally run 20-year terms. Management states that real-estate control, combined with franchisee co-investment, is what enables restaurant performance among the highest in the industry.
• Developmental license, the licensee provides all capital including the real estate; the Company invests no restaurant capital and receives a royalty on a percent of sales plus initial fees.
• Affiliate, same economics as a developmental license, but the Company also holds an equity investment and records its share of results in equity in earnings of unconsolidated affiliates. Used primarily in China and Japan.

Other revenues are fees paid by franchisees to recover a portion of the Company's technology and digital platform costs, plus brand licensing arrangements for consumer packaged goods.

The Company keeps Company-operated restaurants deliberately, they preserve operating expertise, provide a training venue, and serve as the test bed for operating standards, marketing concepts and pricing strategies before Systemwide rollout.

Real estate. At December 31, 2025 the Company owned approximately 56% of the land and 80% of the buildings for restaurants in its consolidated markets.

People. Over 150,000 Company employees worldwide at year-end 2025, approximately 70% based outside the U.S. Beyond that, over two million people work in franchised restaurants.

Strategy, "Accelerating the Arches." Growth pillars, M-C-D:

• Maximize our Marketing, culturally relevant, "Feel-Good Marketing" campaigns; value at every menu tier (everyday low-price options, meal bundles, limited-time deals, personalized digital offers).
• Commit to the Core, World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets among seventeen billion-dollar brands. "Best Burger" reformulation targeted at nearly all markets by end-2026. McCrispy deployed in nearly all major markets by end-2025, with extension into strips and wraps. Chicken and beverages named as the growth categories.
• Double Down on the 4D's:
  • Digital, loyalty programs in 70 markets; target of 250 million 90-day active users by end-2027 and $45.0 billion of annual Systemwide sales to loyalty members by end-2027. "Ready on Arrival" deployed in the top six markets by end-2025.
  • Delivery, nearly 41,000 restaurants across ~100 markets (~90% of restaurants); target of 30% of Systemwide delivery sales originating from the mobile app by end-2027.
  • Drive Thru, nearly 29,000 locations globally, including over 95% of the ~13,700 U.S. locations.
  • Restaurant Development, approximately 2,600 gross openings planned for 2026 (slightly over 4.5% new unit growth gross of closures), progressing toward 50,000 restaurants by end-2027, which would be the fastest unit growth in Company history.

Three technology-enabled platforms underpin the strategy: a consumer platform (loyalty/engagement), a restaurant platform (universal restaurant operating software), and a company platform built through the Global Business Services (GBS) organization.

Capital allocation philosophy, as stated: (i) invest in opportunities to grow the business and drive strong returns, (ii) prioritize the dividend, (iii) repurchase shares with remaining free cash flow over time.

Competition. McDonald's measures its position within the informal eating out ("IEO") segment, which includes 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. It competes primarily on price, convenience, service, experience, menu variety and product quality.

Intellectual property. The "McDonald's" trademark and the Golden Arches Logo are described as of material importance to the business.

Legal proceedings. No single named material matter is disclosed. The Company describes recurring categories of dispute: franchising (quality, service, cleanliness, menu pricing, alleged discrimination, delinquent rents and fees, franchise grants/renewals/terminations, and challenges to the legal distinction between the Company and its franchisees for employment-law purposes); suppliers; employees (wage and hour, discrimination, labor-law compliance); customers (products, service, pricing, advertising, nutrition disclosures); intellectual property; and government regulations. Management states it does not believe any such matter currently under review will have a material adverse effect on financial condition or results of operations, while noting an unfavorable ruling could materially affect net income in the period it occurs.

Cybersecurity. The Company states that risks from cybersecurity threats, including from any previous cybersecurity events, did not materially affect the business, strategy, results of operations or financial condition in 2025. The Global Cybersecurity Program is informed by the NIST Cybersecurity Framework; the CISO reports to the CIO, with Audit & Finance Committee oversight.

Risk factors

From the FY2025 10-K, accession 0000063908-26-000035, condensed to the substantive items.

Strategy and brand

• Strategy execution. Growth in Systemwide sales, operating income and free cash flow depends on the System successfully executing Accelerating the Arches. Delay, higher-than-expected cost, or strategies that simply do not yield the desired results would hurt results.
• Brand value. Brand value rests partly on consumer perception, which is affected by nutritional content, ingredients, commodity sourcing, and people practices across the System, including at restaurants the Company does not operate. Franchisees or business partners may take actions that damage the brand. Adverse social-media or conventional-media commentary about the quick-service category or the brand is called out explicitly.
• Consumer preferences and pricing/marketing execution. Consumer acceptance of menu offerings can shift rapidly. The filing specifically names changes to dietary guidelines and use of weight-loss medications as evolving factors that may alter IEO-segment behavior. Pricing and promotional plans "may not be successful, or may not be as successful as the efforts of our competitors," which could hit sales, guest counts and market share.
• Customer-experience and technology investments (digital channels, loyalty, mobile order and pay, drive thru technology, delivery) may not generate expected results. Third-party delivery may carry lower profitability than a non-delivery transaction and introduces food quality, food safety and customer satisfaction risk.
• Intense competition in a highly competitive IEO segment, including non-traditional participants, convenience stores, grocery stores, coffee shops, online retailers. Results in any period may be hurt by a contracting IEO segment or by competitor/third-party-partner actions and consolidation.
• Intellectual property. Trademarks are not registered in every country where the Company does or may do business. AI-driven tools are named as increasing exposure to theft, unlicensed use, disputes and enforcement challenges.

Operations

• Global scope. Operating in 100+ countries brings cultural, regulatory, geopolitical and economic variance. Disruptions can come from governmental action, price, foreign exchange or trade-related tariffs or controls, trade policies, sanctions and counter-sanctions, government-mandated closures, asset seizures, and from acts of war or terrorism, with knock-on effects including anti-American sentiment. Developing markets carry heightened political instability, corruption and judicial-uncertainty risk.
• Supply chain. Certain items have limited suppliers, increasing reliance. Interruptions and price increases can be driven by shortages, inflation, tariffs, transportation, labor, technology, weather, natural disasters, geopolitical tensions, or hostilities, raising costs, impacting ingredient quality, delaying new openings.
• Franchise business model. Restaurant margins come from franchise fees (rent and royalties on a percent of sales) and, to a lesser degree, Company-operated sales. Because franchisees run their businesses independently, results depend on franchisee sales growth and franchisee financial health, and on franchisees' willingness and ability to fund major initiatives, which in turn depends on funding availability at reasonable interest rates and on banks' lending practices. Franchisee food-safety or operational failures, or an image inconsistent with the brand, damage the Company directly. Ownership mix (franchised vs. Company-operated) itself affects results.
• Labor availability and cost. Staffing challenges have been experienced and may continue, hurting speed of service and satisfaction. Increasingly complex U.S. and international workforce laws (wages and hours, healthcare, immigration, retirement, benefits, workplace practices) raise costs and liability for both the Company and franchisees, pressuring Company-operated margins and franchisee profitability. Boycotts, protests, work stoppages and labor-organization campaigns are named.
• Succession planning for management is called out as its own risk.
• Food safety. Food-safety events, including food-borne illness, "have occurred within the food industry and our System from time to time." Instances of tampering, contamination or illness, actual or perceived, could adversely affect brand, reputation and results.
• Real estate portfolio. Long-term real-estate interests give limited flexibility to alter the portfolio quickly as trade-area demographics, consumer channel use and competitive positions shift. Values and costs are affected by regulation, insurance, zoning, tax and eminent domain, interest rates, financing cost and natural disasters.
• IT failure, security breach, misuse of technology. Security incidents and breaches "have occurred from time to time and may occur in the future" across the Company's systems, franchisee systems and third-party providers. Threats named include AI-enabled attacks, deepfakes, phishing, account takeovers, ransomware. Insurance coverage may be insufficient. Separately, AI tools being incorporated into the business may not generate intended efficiencies and may create operational disruption, data-integrity issues and unintended consequences from algorithmic decision-making; emerging AI regulation (including the EU AI Act) imposes compliance obligations.

Legal and regulatory

• Increasing regulatory and legal complexity across restaurant operations, product packaging and extended producer responsibility, marketing, IT systems, nutritional and allergen content, labeling and disclosure. Exposure to class actions, administrative proceedings, government investigations, shareholder proceedings, employment and personal injury claims, landlord/tenant and supplier disputes, and franchisee claims.
• Franchisee/joint-employer challenge. Litigation, legislative and regulatory action concerning the legal distinction between the Company and its franchisees for employment-law purposes, if determined adversely, "could challenge our franchise business model," increase costs and subject the Company to incremental liability for franchisee actions. The same challenge to supplier independence is flagged.
• Tax. Exposure to changes in tax law or policy and to settlements or adjustments from tax audits in and outside the U.S.
• Accounting standards and impairment. Decisions about underperforming markets or assets may result in impairment or other charges. Long-lived-asset recoverability rests on highly subjective cash-flow estimates whose key assumption is estimated change in comparable sales.
• Privacy and data protection (GDPR, U.S. state laws, EU AI Act), non-compliance or misuse of personal data could bring significant fines, litigation and reputational harm.

Macroeconomic and market conditions

• General economic conditions, including inflationary pressures affecting consumer disposable income and spending habits, which vary significantly by market.
• Currency. Results are affected by exchange-rate fluctuations; unfavorable moves adversely affect reported earnings.
• Health epidemics or pandemics, impact on macro conditions, consumer behavior, labor availability, supply chain and local operations.
• Commodity and operating costs. Beef and chicken markets are singled out as particularly volatile (seasonal shifts, climate, industry demand, food-safety concerns, recalls, regulation, hostilities). The System "can only partially address future price risk through hedging."
• Credit ratings and funding costs. A downgrade or higher funding cost affects interest expense, counterparty availability, collateral requirements and operating/financial flexibility.
• Stock trading volatility from factors largely outside the Company's control, including index rebalancing, shareholder activism, and market commentary.
• Environmental and social impact matters, failure (real or perceived) to progress on initiatives, and equally the act of taking a position on such matters, could adversely affect the business; increasing legislative, regulatory and enforcement scrutiny creates compliance, reputational and litigation exposure.
• Severe weather, natural disasters, hostilities, social and geopolitical unrest, and climate change can affect consumer confidence, supply availability and cost, and local operations including temporary closures and delayed openings.

Management's discussion and analysis, full-year 2025

From the FY2025 10-K, accession 0000063908-26-000035.

2025 financial performance

Global comparable sales +3.1%:

U.S. comparable sales benefited from average check growth. IOM reflected positive comparable sales in nearly all markets, led by Germany and Australia. IDL was led by Japan, with all geographic regions positive.

Headline results:

• Consolidated revenues +4% (+2% constant currency) to $26.9 billion.
• Systemwide sales +7% (+5% cc) to $139.4 billion.
• Consolidated operating income +6% (+4% cc) to $12.4 billion.
• Operating margin 45.2% → 46.1%.
• Diluted EPS $11.95, +5% (+4% cc); currency added $0.16.
• Cash from operations $10.6 billion, +12%.
• Capital expenditures $3.4 billion, mainly new openings.
• Free cash flow $7.2 billion, an 8% increase; conversion rate 84% (2024: 81%).
• Nearly 2,300 new restaurants opened Systemwide.
• Quarterly dividend raised 5% to $1.86 for Q4 (annualized $7.44). $7.1 billion returned to shareholders via dividends and buybacks.

Consolidated operating results

Selling, general & administrative expenses totalled $3,039 million in 2025 (2024: $2,858m; 2023: $2,817m), of which depreciation and amortization was $457m.

Currency. 2025 foreign currency translation reflected the strengthening of most major currencies against the U.S. Dollar, partly offset by weaker Australian and Canadian Dollars. Translation benefits: revenues +$385m, operating income +$198m, net income +$114m, diluted EPS +$0.16.

Net income and EPS

Net income +4% (+3% cc) to $8,563 million; diluted EPS +5% (+4% cc) to $11.95.

• 2025 included net pre-tax charges of $229 million, or $0.25 per share, primarily restructuring associated with Accelerating the Organization (the Company's effort to modernize ways of working).
• 2024 included pre-tax charges of $221 million ($0.25/share) for Accelerating the Organization, plus net pre-tax charges of $70 million ($0.08/share) consisting mainly of transaction costs, property sale gains and non-cash impairment charges tied to the sale of McDonald's business in South Korea and transaction costs for the acquisition of McDonald's business in Israel.

Non-GAAP net income $8,741m (+3%, +2% cc); non-GAAP diluted EPS $12.20 (+4%, +3% cc).

The increase was primarily driven by higher sales-driven franchised margins. The Company repurchased 6.7 million shares for $2.0 billion in 2025 (2024: 10.1 million shares for $2.8 billion).

Revenues by segment

Total franchised revenues plus Company-operated sales rose 3% (1% cc), benefiting from IOM sales performance. U.S. growth came from franchised sales, partly offset by negative Company-operated sales. IDL & Corporate was impacted by the prior-year sale of the South Korea business, partly offset by the prior-year Israel acquisition and positive sales performance.

Franchised sales (not Company revenue, but the base on which franchised revenues are calculated) reached $129,675 million, +7% (+6% cc): U.S. $51,946m (+3%), IOM $42,440m (+8%), IDL $35,289m (+12%). By ownership type: conventional franchised $93,761m (+5%), developmental licensed $22,451m (+14%), foreign affiliated $13,463m (+10%).

Systemwide sales increases: U.S. +3%, IOM +8%, IDL +10%, total +7% (+5% cc).

Restaurant margins

Franchised margins represented approximately 90% of restaurant margin dollars. Company-operated margins reflected ongoing inflationary cost pressure in both the U.S. and IOM; the U.S. was additionally hurt by negative sales performance for the year. Total restaurant margins included D&A of $1.7 billion (2024: $1.6 billion).

Costs and other operating items

• SG&A $3,039m, +6% (+6% cc), primarily higher employee costs including incentive-based compensation. By segment: U.S. $653m (flat), IOM $705m (+12%), IDL & Corporate $1,682m (+7%). Incentive-based compensation $370m (2024: $268m, +38%); excluding it, SG&A $2,670m (+3%).
• Other operating (income) expense, net totalled $2m (2024: $139m; 2023: $99m): gains on sales of restaurant businesses $(133)m, equity in earnings of unconsolidated affiliates $(190)m, asset dispositions and other $97m, impairment and other charges $229m.
• Operating income by segment: U.S. $5,808m (+1%), IOM $6,382m (+7%, +4% cc), IDL & Corporate $203m (from $33m). Operating margin 46.1%; non-GAAP operating income $12,621m, non-GAAP operating margin 46.9% (2024: 46.3%).
• Interest expense +5% (+4% cc), reflecting currency translation and higher average interest rates.
• Effective tax rate 21.4% (2024: 20.5%; the lower 2024 rate reflected discrete benefits related to restructuring initiatives). Consolidated net deferred tax assets $7.4 billion (2024: $7.0 billion).

Cash flows, development and capital returns

• Cash from operations $10.6 billion, up $1.1 billion on favorable working capital movement and improved operating results.
• Free cash flow $7.2 billion, up roughly $0.5 billion or 8% (cash provided by operations $10,551m less capital expenditures $3,365m, versus $9,447m less $2,775m in 2024); conversion rate 84% (2024: 81%). Note that the FY2025 10-K, accession 0000063908-26-000035, is internally inconsistent on this point: its performance highlights describe free cash flow as an 8% increase, while its liquidity discussion describes it as a decrease of $510 million. The cash flow statement arithmetic and the rising conversion rate both support an increase.
• Investing outflow $3.8 billion, down $1.5 billion, primarily because 2024 included the increased ownership stake in Grand Foods Holding.
• Financing outflow $7.1 billion, down slightly, primarily lower treasury stock purchases.
• Cash and equivalents $774 million at year-end 2025 (2024: $1,085 million).
• Openings/closings: 2,276 opened, 396 closed in 2025 (2024: 2,116 / 461). Systemwide restaurants 45,356 (2024: 43,477; 2023: 41,822).
• Capital expenditures +$590 million or +21%, driven by restaurant openings.
• Shareholder returns: 6.7 million shares repurchased for $2,016m; dividends paid $5,115m; total returned $7,131 million. Dividends declared per share $7.17. Shares outstanding at year end 711 million. A $15.0 billion share repurchase authorization was approved November 21, 2024, effective January 1, 2025, with no specified expiration. Dividends have been paid for 50 consecutive years and increased every year.

Financial position

• Total assets +$4.3 billion or +8%, primarily currency translation and a $2.9 billion increase in net property and equipment from higher capex.
• After-tax ROIC from continuing operations: 20.3% in 2025, versus 21.8% in 2024 and 25.2% in 2023.
• Debt obligations $40.0 billion at December 31, 2025 (2024: $38.4 billion); the increase was primarily exchange-rate effects on foreign-currency debt. 97% fixed-rate; weighted-average annual interest rate 4.0%; foreign-currency-denominated debt 39% of total ($15.6 billion, vs. $13.2 billion in 2024). Total debt as a percent of total capitalization: 105% (2024: 111%), the Company operates with negative book shareholders' equity.
• Ratings: commercial paper A-2 / P-2; long-term debt BBB+ / Baa1.
• Liquidity: $10.3 billion remained available of the $15.0 billion Board-authorized borrowing capacity; up to $5.0 billion of commercial paper authorized; $4.0 billion committed line of credit.
• Approximately 68% of operating income is earned outside the U.S.
• Loan guarantees supporting System borrowing arrangements totalled approximately $85 million, with no carrying value recorded.
• Largest foreign-currency net asset exposures at year end: Australian Dollars $1,771m, British Pounds $1,416m, Polish Zloty $820m, China Renminbi $501m, Hong Kong Dollars $289m.

Outlook for 2026 (as given in the FY2025 10-K)

• Net restaurant unit expansion to contribute approximately 2.5% to 2026 Systemwide sales growth, in constant currencies.
• Full-year 2026 SG&A of about 2.2% of Systemwide sales.
• 2026 operating margin percent in the mid-to-high 40% range.
• Interest expense to increase 4%–6%, driven primarily by higher average interest rates.
• Effective tax rate 21%–23% for full-year 2026.
• Capital expenditures $3.7–$3.9 billion, majority toward new unit expansion in the U.S. and IOM. Approximately 2,600 openings globally (about 750 in the U.S. and IOM; developmental licensees and affiliates funding more than 1,800), and approximately 2,100 net additions. A sequential capex increase of about $300–$500 million for 2027, targeting 50,000 global units by end-2027.
• Free cash flow conversion rate in the low-to-mid 80% range for 2026.

Current quarter, Q1 2026 (quarter ended March 31, 2026)

From the Form 10-Q, accession 0000063908-26-000051.

What changed

Global comparable sales +3.8%, a sharp reversal from the prior-year quarter's (1.0)%:

U.S. comparable sales were primarily driven by positive check growth, i.e., price/mix rather than traffic, per the disclosure. IOM saw nearly all markets positive, led by the U.K., Germany and Australia. IDL was led by Japan, with all geographic regions growing.

Headline results:

• Total revenues $6,517m vs. $5,956m, +9% (+4% cc).
• Systemwide sales +11% (+6% cc).
• Operating income $2,953m vs. $2,648m, +12% (+6% cc); excluding restructuring charges in both periods, +11% (+5% cc).
• Net income $1,983m vs. $1,868m, +6% (+1% cc).
• Diluted EPS $2.78 vs. $2.60, +7% (+2% cc); excluding charges, $2.83, +6% (+1% cc). Currency translation contributed +$0.13 to diluted EPS.
• Operating margin 45.3% vs. 44.5%; non-GAAP operating margin 46.0% vs. 45.6%, the increase primarily due to higher other operating income.
• Effective tax rate 22.0% vs. 19.8%, the prior-year quarter benefited from income tax benefits related to restructuring initiatives.

Currency was a large tailwind: translation added $313m to revenues, $152m to operating income and $96m to net income, reflecting the strengthening of most major currencies against the U.S. Dollar, primarily the Euro.

Segment detail

\Total assets comparative is December 31, 2025.*

Franchised revenue composition (Q1 2026 vs. Q1 2025): rents $2,505m vs. $2,313m; royalties $1,483m vs. $1,330m; initial fees $19m vs. $18m.

Franchised sales $31,917m, +11% (+7% cc): U.S. $12,388m (+5%), IOM $10,498m (+17%, +7% cc), IDL $9,030m (+12%, +8% cc). By ownership type: conventional franchised $22,737m (+10%), developmental licensed $5,700m (+15%), foreign affiliated $3,481m (+8%).

Restaurant margins $3,616m vs. $3,314m, +9% (+4% cc). Franchised margins $3,331m (+10%, +5% cc) grew across all segments and represented more than 90% of restaurant margin dollars. Company-operated margins $285m (+4%, (2)% in constant currency), the U.S. Company-operated margin fell 25% to $59m from $79m, primarily on ongoing inflationary cost pressure partly offset by sales-driven growth; IOM Company-operated margin rose to $222m from $186m. Total restaurant margins included D&A of $455m (Q1 2025: $413m).

SG&A increased $77m or 11% (9% cc), primarily higher employee costs including incentive-based compensation, but held at 2.2% of Systemwide sales in both periods.

Other operating (income) expense, net was income of $(69)m vs. expense of $7m: gains on sales of restaurant businesses $(30)m vs. $(8)m (more restaurant sales in IOM); equity in earnings of unconsolidated affiliates $(62)m in both periods; asset dispositions and other $(24)m vs. $11m (higher gains on sale of excess properties); impairment and other charges $47m vs. $66m.

Interest expense $400m, +6% (+4% cc), on higher average debt balances and currency translation. Nonoperating expense of $11m versus income of $(57)m a year ago, largely foreign currency and hedging swings.

Restaurant count

Systemwide restaurants at March 31, 2026: 45,699 (March 31, 2025: 43,756). Conventional franchised 22,616; developmental licensed 9,756; foreign affiliated 11,300; total franchised 43,672; Company-owned and operated 2,027. Segment franchising percentages: U.S. 95%, IOM 89%, IDL 99%.

Restructuring, Accelerating the Organization

Restructuring charges of $47 million in Q1 2026 (Q1 2025: $66 million), of which $46m was recorded primarily at Corporate and $1m in IOM. Accrued balance at March 31, 2026 was $55 million (employee termination benefits $36m, contract termination $4m, professional services and other $15m), substantially all expected to be paid within twelve months.

Cumulative restructuring charges since the initiative began in 2023 total $744 million. The Company expects approximately $250 million of restructuring charges in 2026, primarily professional services costs, with the initiative anticipated to complete during 2027.

Equity method investments

Primary equity-method holdings: Grand Foods Holding (mainland China, Hong Kong and Macau) at 48% ownership, carrying amount $2,095m (December 31, 2025: $2,048m); and McDonald's Japan Holdings Co., Ltd at 35% ownership, carrying amount $655m against a Level 1 fair value of $2,444m (December 31, 2025: carrying $657m, fair value $1,915m), a substantial unrecognized gain on the Japan stake.

Aggregate carrying amount exceeded the Company's proportionate share of investee net assets by $1.4 billion; this difference is not amortized and management concluded there are no impairment indicators. Q1 2026 revenue from these investees $145m, equity in earnings $52m, dividends received $17m.

Balance sheet and cash flow

• Cash from operations $2.4 billion, exceeding capital expenditures by $1.7 billion; roughly flat year over year as working capital changes offset improved operating results.
• Investing outflow $777 million, a slight increase on higher capex.
• Financing outflow $1.2 billion, down $318 million, primarily lower bond repayments.
• Dividend of $1.86 per share, $1.3 billion paid in the quarter; 1.3 million shares repurchased for $393–394 million.
• Total shareholders' equity (deficit) improved to $(1,286)m at March 31, 2026 from $(1,791)m at December 31, 2025.
• Debt: fair value of debt obligations $38.2 billion against a carrying amount of $40.1 billion. $16.5 billion of third-party foreign-currency-denominated debt and $1.8 billion of foreign currency derivatives were designated as net investment hedges. $2.4 billion notional of cash flow hedges on forecasted foreign-currency cash flows. Collateral posted on negative-fair-value derivative positions: $88 million.

Guidance reaffirmed

The 2026 outlook in the 10-Q is unchanged from the 10-K: ~2.5% net unit expansion contribution to Systemwide sales growth (cc); SG&A about 2.2% of Systemwide sales; operating margin in the mid-to-high 40% range; interest expense +4% to +6%; effective tax rate 21%–23%; capital expenditures $3.7–$3.9 billion with approximately 2,600 openings and ~2,100 net additions; free cash flow conversion in the low-to-mid 80% range.

Accounting pronouncements not yet adopted

• ASU 2024-03 (expense disaggregation disclosures), effective for fiscal years beginning after December 15, 2026; impact under evaluation.
• ASU 2025-06 (internal-use software), effective for fiscal years beginning after December 15, 2027; impact under evaluation.

Subsequent events

Form 10-Q for the quarter ended March 31, 2026 (accession 0000063908-26-000051). The subsequent events note states only that the Company evaluated subsequent events through the date the financial statements were issued and filed with the SEC. No acquisitions, divestitures, financings, borrowings, litigation outcomes or other material post-period events are disclosed in the note.

FY2025 Form 10-K (accession 0000063908-26-000035). The subsequent events note states that the Company evaluated subsequent events through the date the financial statements were issued and filed with the SEC and that there were no subsequent events that required recognition or disclosure.

Filings that contain financial statements

• 8-K, filed 2026-02-11 (accession 0000063908-26-000032), fourth-quarter and full-year results for the year ended December 31, 2025 are furnished via Exhibit 99.1, which includes a full Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Cash Flows, and consolidated income-statement metrics for the quarter and year. Exhibit 99.2 adds segment-level revenue, margin, and operating-income detail plus full-year 2026 guidance.
• 8-K, filed 2025-02-10 (accession 0000063908-25-000006), fourth-quarter and full-year results for the year ended December 31, 2024 are furnished via Exhibit 99.1, which includes a full Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Cash Flows, and consolidated income-statement metrics for the quarter and year.
• 8-K, filed 2026-05-07 (accession 0000063908-26-000048), first-quarter 2026 results (quarter ended March 31, 2026) are furnished via Exhibit 99.1, which includes condensed consolidated income-statement metrics (revenue, operating income, net income, diluted EPS) for the quarter; Exhibit 99.2 adds segment detail and reiterates full-year 2026 guidance. No balance sheet or cash-flow statement is included.
• 8-K, filed 2025-11-05 (accession 0000063908-25-000057), third-quarter 2025 results (quarter and nine months ended September 30, 2025) furnished via Exhibit 99.1, condensed income-statement metrics only.
• 8-K, filed 2025-08-06 (accession 0000063908-25-000036), second-quarter 2025 results (quarter and six months ended June 30, 2025) furnished via Exhibit 99.1, condensed income-statement metrics only.
• 8-K, filed 2025-05-01 (accession 0000063908-25-000021), first-quarter 2025 results (quarter ended March 31, 2025) furnished via Exhibit 99.1, condensed income-statement metrics only.

Earnings and guidance

• Q1 2026 (reported 2026-05-07, accession 0000063908-26-000048): Global comparable sales +3.8% (U.S. +3.9%, International Operated Markets +3.9%, International Developmental Licensed Markets +3.4%). Consolidated revenue $6,517M (+9%), operating income $2,953M (+12%), net income $1,983M (+6%), diluted EPS $2.78 (+7%; $2.83 excluding $47M of pre-tax restructuring charges tied to the ongoing "Accelerating the Organization" initiative). Global Systemwide sales exceeded $34 billion for the quarter (+11%, +6% constant currency). Full-year 2026 guidance was reiterated (see below).
• Full year 2025 / Q4 2025 (reported 2026-02-11, accession 0000063908-26-000032): Full-year comparable sales +3.1%; Q4 comparable sales +5.7% with positive comparable guest counts across all segments. Full-year revenue $26,885M (+4%), operating income $12,393M (+6%), net income $8,563M (+4%), diluted EPS $11.95 (+5%; $229M of net pre-tax restructuring/other charges for the year). Q4 diluted EPS was $3.03 (+8%). Global Systemwide sales exceeded $139 billion for the year (+7%, +5% constant currency); loyalty-member Systemwide sales grew 20% to nearly $37 billion with 90-day active loyalty users up 19% to almost 210 million. The company declared a 5% increase in its quarterly cash dividend, to $1.86 per share.
  • FY2026 guidance issued with this release (reiterated in the Q1 2026 release): net restaurant unit expansion contributing ~2.5% to constant-currency Systemwide sales growth; SG&A of about 2.2% of Systemwide sales; operating margin in the mid-to-high 40% range; interest expense up 4–6%; effective tax rate 21–23%; capital expenditures of $3.7–$3.9 billion; approximately 2,600 gross restaurant openings and roughly 2,100 net additions; free cash flow conversion in the low-to-mid 80% range.
• Q3 2025 (reported 2025-11-05, accession 0000063908-25-000057): Comparable sales +3.6% (broad-based across segments). Revenue $7,078M (+3%), operating income $3,357M (+5%), net income $2,278M (+1%), diluted EPS $3.18 (+2%; +$0.04 impact from $39M of restructuring charges). Global Systemwide sales over $36 billion for the quarter (+8%, +6% constant currency).
• Q2 2025 (reported 2025-08-06, accession 0000063908-25-000036): Comparable sales +3.8% across all segments. Revenue $6,843M (+5%), operating income $3,232M (+11%), net income $2,253M (+11%), diluted EPS $3.14 (+12%; $43M of restructuring charges).
• Q1 2025 (reported 2025-05-01, accession 0000063908-25-000021): Comparable sales -1.0% (largely a Leap Day comparison effect versus Q1 2024). Revenue decreased 3% to $5,956M, operating income -3%, net income roughly flat, diluted EPS $2.60 (-2%; $66M of restructuring charges). This was the weakest quarter in the window, framed by management as a difficult comparison rather than a change in underlying trend, and results recovered through the remainder of 2025.
• Full year 2024 / Q4 2024 (reported 2025-02-10, accession 0000063908-25-000006): Full-year revenue $25,920M (+2%), operating income $11,712M (+1%), net income $8,223M, diluted EPS $11.39 (-1%; results included $221M of restructuring charges and $70M of transaction/impairment costs tied to the prior-year South Korea business sale and Israel business acquisition). Global Systemwide sales exceeded $130 billion for the year. This filing establishes the year-ago comparison base for the FY2025 results above; no new capital or M&A actions were disclosed in this release itself.

Across the reporting window, restructuring charges tied to the "Accelerating the Organization" cost/efficiency initiative (first announced in January 2023) recur in every quarterly release as a modest, consistent drag on GAAP operating income and EPS (typically $0.04–$0.09 per share per quarter); management treats these as recurring items to be excluded from underlying trend analysis rather than one-time news.

Capital markets activity

• March 3, 2025 (accession 0000063908-25-000014): Issued $600 million of 4.600% Medium-Term Notes due 2030 and $900 million of 4.950% Medium-Term Notes due 2035 under the company's existing medium-term notes shelf program (Form S-3, Registration No. 333-281501, dated August 12, 2024).
• August 27, 2025 (accession 0000063908-25-000042): Issued $550 million of 4.400% Medium-Term Notes due 2031 and $750 million of 5.000% Medium-Term Notes due 2036 under the same shelf program.
• February 11, 2026 (accession 0000063908-26-000032): Board declared a 5% increase in the quarterly cash dividend, to $1.86 per share, alongside the fourth-quarter/full-year 2025 results.

Board and management changes

• January 13, 2025 (accession 0000063908-25-000003): Director John J. Mulligan notified the company of his decision to retire from the Board, effective as of the 2025 Annual Shareholders' Meeting; the filing states the retirement was not due to any disagreement with the company.
• March 10, 2025 (accession 0000063908-25-000017): The Board approved senior-management changes: Gillian (Jill) McDonald was appointed Executive Vice President – Global Chief Restaurant Experience Officer, separating from her prior role as EVP–President, International Operated Markets (IOM), effective on or about May 1, 2025. Manuel JM Steijaert, previously EVP–Global Chief Customer Officer, was appointed to replace her as EVP–President, IOM, effective the same date.
• February 10, 2026 (accession 0000063908-26-000028): The Board increased its size to 12 directors and elected James D. Farley, Jr., President and CEO of Ford Motor Company, as a new independent director, effective February 4, 2026.
• April 2, 2026 (accession 0000063908-26-000042, Amendment No. 1 to the February 10, 2026 Form 8-K): The Board appointed Mr. Farley to its Audit & Finance Committee and Corporate Responsibility Committee, effective March 30, 2026.

Not material / not carried forward

Annual shareholder meeting voting results (certified results filed following the May 2025 and May 2026 annual meetings) and the February 2025 disclosure of the annual Target Incentive Plan payout structure for named executive officers were procedural filings with no bearing on the investment case and are not detailed here.

Items not reflected in filings to date

No 8-K in this window discloses any merger, acquisition, divestiture, restructuring beyond the recurring "Accelerating the Organization" program, impairment, going-concern issue, or covenant matter. The prior-year comparisons in the Q3 2025 and FY2024 releases reference the 2024 sale of the McDonald's business in South Korea and the 2024 acquisition of the McDonald's business in Israel, but both of those transactions closed before the start of this filing window (January 2025) and no new M&A activity has been disclosed since.

About this file

MCD annual income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

• Source statement. FY2025 Form 10-K (accession 0000063908-26-000035), Consolidated Statement of Income, Consolidated Balance Sheet and Consolidated Statement of Cash Flows
• Balance sheet: note, FY2023. The FY2025 10-K balance sheet presents only December 31, 2025 and 2024. The two December 31, 2023 figures shown here are the ones the same 10-K discloses elsewhere: year-end cash from the Consolidated Statement of Cash Flows and total assets from the segment information note.
• Cash flow: free cash flow definition. Cash provided by operations less capital expenditures, the definition the company uses.
• Franchisor metrics: systemwide sales note. Sales at all restaurants, whether operated by the company or by franchisees. Franchised sales are not recorded as revenue by the company; they are the basis on which franchised revenues are calculated. Computed as the franchised sales disclosed in the 10-K plus sales by company-owned and operated restaurants.

MCD quarterly income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

• Source statement, 2026-03-31. Form 10-Q for the quarter ended March 31, 2026 (accession 0000063908-26-000051)
• Source statement, 2025-03-31. Prior-year comparative columns of the Form 10-Q for the quarter ended March 31, 2026 (accession 0000063908-26-000051)
• Balance sheet: shares outstanding cover page note, 2026-03-31. Shares of common stock outstanding as of March 31, 2026, per the cover of the Form 10-Q.
• Balance sheet: note, 2025-03-31. The 10-Q balance sheet presents only March 31, 2026 and December 31, 2025, so the only March 31, 2025 balance-sheet figure available in this filing is period-end cash from the comparative cash flow statement.
• Franchisor metrics: systemwide sales note. Computed as the franchised sales disclosed in the 10-Q plus sales by company-owned and operated restaurants.
• Notes, 2026-03-31. Pre-tax charges of $47 million ($0.05 per diluted share) primarily related to restructuring under the company's Accelerating the Organization effort. Excluding them the company reported non-GAAP net income of $2,019 million and diluted EPS of $2.83.; During the quarter the company paid a dividend of $1.86 per share ($1.3 billion) and repurchased 1.3 million shares for $393 million.
• Notes, 2025-03-31. Pre-tax charges of $66 million ($0.07 per diluted share) primarily related to restructuring under Accelerating the Organization.

MCD trailing twelve month income statement and cash flow

Derived by AI from the figures the filings report. No filing prints these, so none of them is linked.

Adjustments

MCD annual revenue and profit by segment

Notes

• Every figure comes from two filings: the fiscal 2025 Form 10-K (accession 0000063908-26-000035, filed February 24, 2026, for the year ended December 31, 2025) and the Form 10-Q for the quarter ended March 31, 2026 (accession 0000063908-26-000051, filed May 7, 2026). Only those two filings were used; no earlier filings were consulted to extend the history.
• The 10-K's income statement and cash flow statement present three years (2025, 2024 and 2023), so all three annual periods are reported in full. The 10-K's balance sheet presents only December 31, 2025 and 2024, so the 2023 entry carries only the two balance-sheet items the same 10-K discloses elsewhere: year-end cash from the cash flow statement and total assets from the segment note.
• All amounts in this file are stated in actual dollars. The statements themselves are presented in millions, so the reported figures were multiplied by one million. Share counts on the income statements are presented in that same scale and were converted the same way: fiscal 2025 weighted-average diluted shares of 716.4 million are reported here as 716,400,000.
• Total debt: the balance sheet shows a single Long-term debt line of $39,973 million at December 31, 2025 and $40,105 million at March 31, 2026. The 10-K's debt note confirms this equals total debt obligations, because $798 million of short-term borrowings and $725 million of current maturities at December 31, 2025 are classified as long-term debt, being supported by a long-term line of credit expiring in June 2028. There is therefore no separate short-term debt figure to add.
• Lease obligations are reported separately from debt, matching the filings: current lease liability plus long-term lease liability totaled $14,841 million at December 31, 2025 and $14,776 million at March 31, 2026, against a lease right-of-use asset of $14,606 million and $14,513 million respectively.
• Total shareholders' equity is negative (a deficit of $1,791 million at December 31, 2025, improving to a deficit of $1,286 million at March 31, 2026). This is the accumulated effect of share repurchases: treasury stock stood at $79,316 million at December 31, 2025 against retained earnings of $70,282 million. It is not a sign of insolvency, and total liabilities in this file are derived as total assets less total equity, so they exceed total assets by the amount of the deficit.
• Where the filings print an explicit total, that printed total is what appears here, and the individual components are reported alongside it. Two lines are affected by the rounding the 10-K warns about. Total company-operated restaurant expenses are the $8,268 million (2025), $8,334 million (2024) and $8,224 million (2023) totals stated in the 10-K's segment note; the three components listed on the income statement (food & paper, payroll & employee benefits, and occupancy & other operating expenses) sum to $8,269 million, $8,335 million and $8,224 million respectively. Selling, general & administrative expense is the $3,039 million (2025), $2,858 million (2024) and $2,817 million (2023) total stated in the 10-K's MD&A and segment note, while the depreciation and amortization and 'other' components shown on the income statement sum to $3,040 million, $2,859 million and $2,817 million. The 10-K states that rows and columns may not add because percentages and totals are calculated from underlying whole-dollar amounts.
• Restaurant margins are the company's own measures as disclosed in the filings, not derived here: franchised restaurant margin is revenue from franchised restaurants less franchised occupancy expense, and company-operated margin is company-operated sales less food & paper, payroll and occupancy costs for those restaurants. The margin percentages shown were computed from those disclosed dollar amounts.
• Systemwide sales are computed as the franchised sales disclosed in each filing plus sales by company-owned and operated restaurants. For 2025 this gives $139,365 million, consistent with the 10-K's statement that systemwide sales increased 7% to $139.4 billion.
• Free cash flow is calculated as cash provided by operations less capital expenditures, which is the definition the company states in the 10-K.
• The fiscal 2025 and first-quarter 2026 results both include restructuring charges under the company's 'Accelerating the Organization' program: net pre-tax charges of $229 million ($0.25 per diluted share) for fiscal 2025 and $47 million ($0.05 per diluted share) for the March 2026 quarter. All figures reported here are the GAAP amounts as presented on the face of the statements; the company's own non-GAAP alternatives are noted where the filings state them.
• No filing covering a period later than the quarter ended March 31, 2026 was available, so no press-release figures were used; every number here comes from an audited annual report or a reviewed quarterly report.

Uncertainties

• The 10-K describes 2025 free cash flow in two places in ways that do not match: the highlights section calls it '$7.2 billion, an 8% increase from the prior year' while the liquidity section calls it '$7.2 billion in 2025, a decrease of $510 million or 8%'. The underlying statement figures are unambiguous and support an increase: cash from operations less capital expenditures was $7,186 million in 2025 versus $6,672 million in 2024, and the free cash flow conversion rates the 10-K reports (84% for 2025 and 81% for 2024) match those computed amounts. The computed figures are what appear in this file.
• December 31, 2023 balance-sheet data is incomplete by necessity. The fiscal 2025 10-K's balance sheet presents only 2025 and 2024, so only year-end cash and total assets are available for 2023, and no 2023 figures for debt, equity or leases are reported here.
• March 31, 2025 balance-sheet data is likewise incomplete: the 10-Q's balance sheet presents March 31, 2026 and December 31, 2025 only, so period-end cash is the sole March 31, 2025 balance-sheet item shown.
• Trailing-twelve-month diluted EPS is presented as the sum of the reported quarterly EPS figures ($12.13). Because the weighted-average share count declines each quarter with buybacks, this differs marginally from trailing net income divided by any single share count.
• Systemwide sales figures are computed by adding the disclosed franchised sales to company-operated sales rather than being lifted from a single disclosed line, since the filings state systemwide sales in the MD&A narrative in rounded billions rather than as a statement line. The computed 2025 figure of $139,365 million reconciles to the 10-K's stated $139.4 billion.
• Two subtotals differ by $1 million depending on whether the filing's printed total or the sum of its printed components is used: company-operated restaurant expenses (2025 and 2024) and selling, general & administrative expense (2025 and 2024). This file uses the printed total in both cases and discloses the component sums. The differences are immaterial and the 10-K itself states that totals may not add because they are calculated from underlying whole-dollar amounts.

Company details

Fiscal period