MCD McDonald's 10-Q 2026-09-30 section summaries

McDonald’s — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 revenue grew 1.1%, while operating income rose 7.1%, expanding operating margin to approximately 50.2% from 47.4%. For 9M, revenue increased 4.5% and operating income 7.0%.

Revenue mix

Franchised restaurant revenue remained the largest contributor to growth. Company-operated revenue declined 3.2% in Q3 but rose 2.3% for 9M. Franchise revenue consisted of:

Segment results

International Operated Markets revenue growth accelerated from 0.1% in Q3 to 5.5% for 9M; its 9M operating income was reported up 7.3%, compared with 2.0% Q3 growth. International Developmental Licensed Markets & Corporate operating income grew 79.4% in Q3 and 26.3% for 9M. The U.S. was 96% franchised, International Operated Markets 90%, and International Developmental Licensed Markets 99%.

Cash flow and investment

Q3 operating cash flow fell despite higher net income; working-capital contribution declined to $74 million from $570 million. 9M cash used for financing increased to $5.409 billion from $3.884 billion, including $1.770 billion of treasury-stock purchases (prior year $1.483 billion) and $3.954 billion of dividends (prior year $3.792 billion). 9M depreciation and amortization was $1.698 billion, versus $1.623 billion.

Balance sheet, capital and operating metrics

Negative book equity reflects, in part, $81.043 billion of treasury stock at cost. The company repurchased 6.2 million shares for $1.770 billion during 9M; issued common shares remained 1,660.6 million. Segment assets were $23.249 billion for U.S. (from $23.008 billion at year-end), $28.000 billion for International Operated Markets (from $27.487 billion), and $9.407 billion for International Developmental Licensed Markets & Corporate (from $9.020 billion).

Other notable developments and risks

The Accelerating the Organization initiative is expected to continue through 2027. It incurred $154 million of restructuring charges in 9M 2026, primarily at Corporate, versus $152 million in 9M 2025; cumulative charges since its 2023 launch reached $850 million. Management expects approximately $225 million of charges in 2026, primarily professional-services costs. The September 30 accrued restructuring balance was $53 million, substantially all payable within 12 months.

Equity-method investees, including operators in mainland China, Hong Kong, Macau and Japan, contributed $459 million of revenue and $157 million of equity earnings in 9M, compared with $433 million and $146 million. The carrying amount of primary investments exceeded McDonald’s proportionate share of investee net assets by $1.4 billion; management reported no impairment indicators.

Foreign exchange remained a source of earnings volatility. In 9M, gains on foreign-currency-denominated debt and net-investment hedges were $493 million and $516 million, respectively, versus losses of $1.562 billion and $1.787 billion in 2025. Cash-flow hedges had $2.4 billion notional outstanding and covered certain forecast exposures for up to 18 months; the $71 million after-tax cumulative hedge gain was not expected to significantly affect earnings over the next 12 months. Net-investment hedges included $15.4 billion of third-party foreign-currency debt and $1.2 billion of foreign-currency derivatives. Counterparty exposure was not significant to any individual counterparty; netting agreements were used, with $8 million of collateral required.

McDonald’s — Q3 and nine months ended September 30, 2026

Business and operating performance

McDonald’s operated 46,554 restaurants at September 30, 2026, approximately 95% of them franchised. Franchise revenue—primarily rent and royalties tied to restaurant sales—provides a relatively stable revenue base; company-operated restaurants support training, standards and testing new initiatives.

Revenue grew 1% in Q3 and 5% in 9M; in constant currencies, growth was 1% and 2%, respectively. Systemwide sales rose 4% in Q3 and 6% in 9M (5% in constant currencies). Operating income increased 7% in both periods. The 9M operating margin was 47.6%, compared with 46.5% a year earlier; improvement primarily reflected higher Other operating income.

For 9M, franchised revenue was $12.887B from $12.238B; company-operated sales were $7.322B from $7.154B; and Other revenue was $565M from $485M. Other revenue mainly includes franchisee technology and digital-platform fees and brand licensing. Franchisee sales were $35.625B in Q3, compared with $34.093B; for 9M they were $101.994B, compared with $95.656B.

Comparable sales and geographic results

Global comparable-sales growth slowed to 1.5% in Q3 from 3.6% a year earlier; 9M growth was 2.1%, compared with 2.2%.

Q3 U.S. guest counts were negative, largely offset by positive check growth; 9M U.S. comps rose 1.4% from 0.5%, primarily on check and mix despite negative guest counts. International Operated Markets comps increased 1.4% in Q3 and 2.2% in 9M, led by Germany and Australia; France was negative in both periods. International Developmental Licensed Markets comps rose 4.2% in Q3 and 3.2% in 9M, led by Japan and broader regional strength, partly offset by China.

International Operated Markets 9M revenue was $10.400B, compared with $9.872B, and operating income was $5.026B, compared with $4.686B. International Developmental Licensed Markets & Corporate 9M operating income was $283M, compared with $224M.

Costs, margins and cash returns

Q3 restaurant margins totaled $4.192B, compared with $4.088B; franchised margins were $3.800B from $3.697B, about 90% of restaurant margin dollars. Company-operated margins were $392M, compared with $391M; U.S. company-operated margins fell 16% to $75M, primarily due to inflationary costs. For 9M, company-operated U.S. margins declined 15% to $226M from $266M. Higher Other operating income—including gains on restaurant sales of $97M in Q3 versus $35M and $167M in 9M versus $50M—supported operating performance. Q3 SG&A fell 3%, partly because the prior-year quarter included incremental marketing spending; 9M SG&A rose 8% on higher employee and incentive compensation and the Worldwide Owner/Operator convention. Interest expense rose 4% for 9M, primarily due to higher average rates.

Investing cash use was $2.5B, lower mainly because of increased proceeds from restaurant sales. Financing cash use was $5.4B, up $1.5B, primarily due to lower bond issuance, partly offset by lower repayments. McDonald’s paid $4.0B in dividends and repurchased 6.2M shares for $1.8B during 9M. A 4% dividend increase to $1.93 per share was declared for payment December 15, 2026.

Restructuring charges were $56M pre-tax ($0.06 per share) in Q3 2026, versus $39M ($0.04 per share); 9M charges were $155M ($0.17 per share), versus $148M ($0.16 per share). Excluding these charges, diluted EPS was $3.57 in Q3, up 11%, and $9.78 in 9M, up 8%. Currency translation reduced Q3 operating income and net income by $8M each, or diluted EPS by $0.01; in 9M it benefited revenue by $429M, operating income by $194M, net income by $115M and diluted EPS by $0.16.

Strategy, outlook and risks

McDonald’s > NEXT builds on Accelerating the Arches, focusing on menu, consumer, restaurant and people initiatives to improve customer appeal, market share, guest counts and productivity. The company aims to gain approximately 1.5 percentage points of chicken and beverage market share by end-2030 versus September 2026 while maintaining beef leadership. Restaurant > NEXT targets approximately 250 basis points of gross restaurant-level efficiency gains as it is deployed across the U.S. and International Operated Markets. Initiatives include global marketing, loyalty and digital engagement, AI-enabled tools such as ArchIQ, and the Make It Golden hospitality and consistency program. The company plans approximately $8.5B of cash partnering support through 2036, including approximately $5B by 2030, through rent relief and capital support.

For 2026, management expects net restaurant expansion to add about 2.5% to Systemwide sales growth, approximately 2,500 openings and 2,100 net additions, and capital expenditures of about $3.7B. It targets a mid-to-high-40% operating margin, SG&A near 2.2% of Systemwide sales and low-to-mid-80% free-cash-flow conversion. Long-term plans include 50,000 restaurants by end-2028 and a low-to-mid-50% operating margin by end-2030.

Key near-term pressures include negative U.S. guest counts, inflation affecting company-operated margins, and weaker results in France and China. Longer-term execution depends on franchisee alignment, investment capacity, workforce and technology readiness, and local market conditions. Other material exposures include changing consumer preferences and competition; food safety, labor and supply-chain disruptions; inflation, commodity prices and foreign exchange; cybersecurity, privacy and AI-related risks; and legal, regulatory, tax and reputational risks. Weather and geopolitical events may disrupt supply, raise costs or interrupt restaurant operations; insurance may not fully cover resulting losses.

No material changes were reported in McDonald’s market-risk disclosures from those in its Form 10-K for the year ended December 31, 2025.

Controls and Procedures

As of September 30, 2026, management, including the CEO and CFO, concluded that McDonald’s disclosure controls and procedures were effective.

McDonald’s is undertaking a multi-year technology and operating-model transformation that includes implementing new systems and centralizing or outsourcing certain routine functions to modernize financial processes and improve efficiency. The changes are not in response to an identified internal-control deficiency or weakness. The company has modified certain processes and will continue monitoring and adjusting key controls as implementation progresses. Other than these transformation-related changes, no changes during the quarter were identified as materially affecting, or reasonably likely to materially affect, internal control over financial reporting.

This section provides no specific risk factors or financial information. It directs readers to Part I, Item 2, “Risk Factors,” for discussion of risks affecting the Company.

Rule 10b5-1 trading plans

During the quarter ended September 30, 2026, three McDonald’s officers adopted Rule 10b5-1 trading plans during open trading windows. The plans provide for potential future sales; they are not completed transactions.

For both Flatley and Ralls-Morrison, the number of shares ultimately eligible for sale under the 2024 PRSU awards depends on company performance against pre-established targets. No other officer or director adopted, modified, or terminated a Rule 10b5-1 plan or non-Rule 10b5-1 trading arrangement during the quarter. This section reports no company financial results or operational changes.