McDonald's Corporation
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McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers are referred to herein as the "System."
BUSINESS SUMMARY
GENERAL
For the year ended December 31, 2025, there were no material changes to the Company's corporate structure or in its method of conducting business. Refer to the Segment and Geographic Information section on page 51 of this Form 10-K for additional information.
DESCRIPTION OF THE BUSINESS
The Company franchises and owns and operates McDonald’s restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries. Of the 45,356 McDonald's restaurants at year-end 2025, approximately 95% were franchised.
The Company’s reporting segments are aligned with its strategic priorities and reflect how management reviews and evaluates operating performance. Significant reportable segments include the United States ("U.S.") and International Operated Markets. In addition, the International Developmental Licensed Markets & Corporate includes the results of over 75 countries as well as Corporate activities.
McDonald’s franchised restaurants are owned and operated under one of the following structures - conventional franchise, developmental license or affiliate. The optimal ownership structure for an individual restaurant, trading area or market (country) is based on a variety of factors, including the availability of individuals with entrepreneurial experience and financial resources, as well as the local legal and regulatory environment in critical areas such as property ownership and franchising. The business relationship between the Company and its independent franchisees is supported by adhering to standards and policies, including McDonald's Global Brand Standards, and is of fundamental importance to overall performance and to protecting the McDonald’s brand.
The Company is primarily a franchisor and believes franchising is paramount to delivering great-tasting food, locally relevant customer experiences and driving profitability. Franchising enables an individual to be their own employer and maintain control over all employment related matters, marketing and pricing decisions, while also benefiting from the strength of McDonald’s global brand, operating system and financial resources.
Directly operating McDonald’s restaurants contributes significantly to the Company's ability to act as a credible franchisor. One of the strengths of the franchising model is that the expertise from Company-owned and operated restaurants allows McDonald’s to improve the operations and success of all restaurants, and allows innovations from franchisees to be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, the Company is able to further develop and refine operating standards, marketing concepts and product and pricing strategies.
The Company’s revenues consist of sales by Company-owned and operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology and digital platforms and revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand.
Conventional Franchise
Under a conventional franchise arrangement, the Company generally owns or secures a long-term lease on the land and building for the restaurant location and the franchisee pays for equipment, signs, seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables it to achieve restaurant performance levels that are among the highest in the industry.
Franchisees are responsible for reinvesting capital in their businesses over time. In addition, to accelerate implementation of certain initiatives, the Company may co-invest with franchisees to fund improvements to their restaurants or operating systems. These investments, developed in collaboration with franchisees, are designed to cater to consumer preferences, improve local business performance and increase the value of the McDonald's brand through the development of modernized, more attractive and higher revenue generating restaurants.
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The Company requires franchisees to meet rigorous standards and generally does not work with passive investors. The business relationship with franchisees is designed to facilitate consistency and high quality at all McDonald’s restaurants. Conventional franchisees contribute to the Company’s revenue, primarily through the payment of rent and royalties based upon a percent of sales, with specified minimum rent payments, along with initial fees paid upon the opening of a new restaurant or grant of a new franchise. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.
Developmental License or Affiliate
Under a developmental license or affiliate arrangement, licensees are responsible for operating and managing their businesses, providing capital (including the real estate interest) and developing and opening new restaurants. The Company generally does not invest any restaurant capital under a developmental license or affiliate arrangement, and it receives a royalty based on a percent of sales, and generally receives initial fees upon the opening of a new restaurant or grant of a new license.
While developmental license and affiliate arrangements are largely the same, affiliate arrangements are used in a limited number of foreign markets (primarily China and Japan) within the International Developmental Licensed Markets, as well as a limited number of individual restaurants within the International Operated Markets, where the Company also has an equity investment and records its share of net results in equity in earnings of unconsolidated affiliates.
PURPOSE, MISSION AND VALUES
Through its size and scale, McDonald's embraces and prioritizes its role and commitment to the communities in which it operates through its purpose to feed and foster communities, and its mission to make delicious feel-good moments easy for everyone. The Company is guided by five core values that define who it is and how it runs the business across the three-legged stool of McDonald’s franchisees, suppliers, and employees:
1.Serve – We put our customers and people first;
2.Inclusion – We open our doors to everyone;
3.Integrity – We do the right thing;
4.Community – We are good neighbors; and
5.Family – We get better together.
The Company believes that its people, all around the world, set it apart and bring these values to life daily.
HUMAN CAPITAL MANAGEMENT
The Company’s people strategies aim to support an inclusive environment that represents the communities in which it operates. To do this, the Company offers quality training and learning opportunities and upholds high standards of health and safety designed to create and maintain a safe and respectful workplace for its employees. In support of the Company’s values, the Company’s annual incentive plan holds the Chief Executive Officer ("CEO") and Executive Officers accountable for efforts towards the following Company initiatives: (i) advancing the Company’s values, (ii) driving employee engagement and (iii) executing its franchising strategy.
You can find more information about the Company's human capital management and related initiatives in our 2024-2025 Purpose & Impact Report and on the “Our Purpose & Impact” section of the Company’s website.
People
Company employees, which include those in the Company's corporate and other offices as well as in Company-owned and operated restaurants, totaled over 150,000 worldwide as of year-end 2025, of which approximately 70% were based outside of the U.S. In addition to Company employees, the over two million individuals who work in McDonald's franchised restaurants around the world are critical to the Company’s success, enabling it to drive long-term value creation and further its purpose and mission. People are at the cornerstone of the Company's business and an essential part of the System.
Commitment to Inclusion
Inclusion is one of the Company’s core values, which it strives to integrate into business operations to deliver an inclusive experience for stakeholders.
Grounded in the Company's values, the Company believes in treating everyone with dignity, fairness and respect, always. There are four guiding principles the Company applies to evaluate its work: (i) our system thrives when we are shaped by the communities in which we operate, (ii) our early and full adoption of inclusion gives us a competitive advantage, (iii) individuals perform their best when they feel they belong and (iv) our priority is to be a responsible business, acting lawfully and being responsive to the business environment.
Safe & Respectful Workplaces
The Company believes that it has a responsibility to help protect the health and safety of anyone who works at or enters a McDonald’s restaurant, a concept that is incorporated into Company policies, codes of conduct and guiding principles. The Company is committed to promoting safety in all of the Company’s corporate and other offices and Company-owned and operated restaurants, as well as supporting franchisees to do the same in the restaurants they own and operate. The Company also works to foster respectful workplaces, where people can be themselves without fear of harassment, discrimination, retaliation or violence, and to help its franchisees do the same in their workplaces.
The Company's Global People Brand Standards (which apply to all McDonald’s restaurants, whether Company-owned and operated or franchised) prioritize action in four key areas: protecting employee health and safety, preventing workplace violence, preventing harassment, discrimination and retaliation, and listening through restaurant employee feedback.
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The Company's existing procedures include several ways that an individual can report an incident or raise a concern. The Company requires all restaurants to maintain their own reporting process. In addition, the Global Business Integrity Line is available to anyone and allows for concerns to be reported anonymously.
The Company also strives to weave human rights into its day-to-day practices, helping fulfill its commitment to respect the rights of all people and communities who produce, serve, and enjoy McDonald’s food. The Company’s commitment to respect human rights is set out in its Human Rights Policy and is in line with the United Nations Guiding Principles on Business and Human Rights (UNGPs). In addition to the Human Rights Policy, the Company has standards, principles and policies to reinforce a culture of integrity and respect, forming the foundation of its efforts to feed and foster communities worldwide. As part of its efforts to promote respect for human rights through its standards, the Company has specifically set policies and guidance to help address and protect populations that may be most vulnerable to human rights violations. For example, the Company’s Responsible and Ethical Recruitment Principles outline standards to prevent the exploitation of migrant workers and ensure responsible recruitment for this population at all McDonald’s restaurants. Additional information about the Company’s human rights approach and focus areas, as well as related policies and standards, can be found on the "Human Rights" section of the Company's website.
Compensation, Benefits, and Talent Development
The compensation and benefits provided to Company employees, including both corporate staff and Company-owned and operated restaurant employees, are established based upon competitive considerations in the relevant labor market. The amount and type of compensation varies by an employee's level and location, and typically includes some combination of the following (in addition to base pay): cash bonuses, stock-based awards, retirement savings programs, and health and welfare benefits. Company employees may also receive paid time off, family care resources, tuition assistance and flexible work schedules.
The Company follows Global Pay Principles to help ensure that its pay practices are understood and consistently implemented for all Company employees; these principles enforce its understanding that pay should be competitive, non-discriminatory, performance-based, understandable, and compliant with all applicable legal and regulatory requirements and standards. The Company’s annual pay equity analysis aims to ensure equitable pay practices are consistently implemented and executed across the Company. For more information related to the Company’s annual pay equity analysis please refer to the 2024-2025 Purpose & Impact Report.
Additionally, the Company has a long-standing commitment to providing training, education benefits and career path opportunities that empower its people. Learning and development is a competitive advantage to McDonald’s and a true differentiator to its employee value proposition. McDonald’s Hamburger University has multiple learning centers around the world, as well as online resources, that provide training for Company employees, as well as franchisees and their eligible employees. The Company is committed to providing opportunities for people to enhance their skills and fulfill their potential through talent development programs and language and technical skill training and support for continuing education, as it believes this helps to facilitate talent attraction, career development, and retention.
Communities
The Company aims to build strong and inclusive connections that deliver on the needs of the communities McDonald’s serves, because the Company believes that doing so is consistent with the Company’s business objectives and values. The Company is focused on partnering with organizations that share the Company’s core values, harnessing its size and influence to help maximize collective impact, while also strengthening relationships with the communities in which it operates. The Company’s strategy focuses on three key strategic outcome areas - Supporting Families, Times of Need, and Opportunity Employment.
The Company is proud to support Ronald McDonald House and their global network of nearly 250 local chapters in more than 60 countries and regions in their mission to provide essential services to remove barriers, strengthen families and promote healing when children need healthcare. McDonald's creates opportunities that encourage Company employees, franchisees and their employees, suppliers, and customers to get involved in philanthropic and volunteering opportunities.
SUPPLY CHAIN, FOOD SAFETY AND QUALITY
The Company and its franchisees purchase food, packaging, equipment, and other goods from numerous independent suppliers. The Company has established and enforces high food safety and quality standards. The quality management systems and processes involve ongoing product reviews, supplier visits and third-party verifications with performance expectations. The Company requires periodic third-party food safety audits and, in the case of higher-risk foods, unannounced Good Manufacturing Practices (GMP) audits of suppliers to verify compliance with its food safety and quality standards. In addition, the Company promotes the consistency of its core menu by regular sensory evaluations and calibration trainings. As part of its digital food safety initiative, the Company has optimized internal digital platforms to monitor and measure adherence to our food safety standards and improve data quality. A Food Safety Advisory Council, comprised of the Company’s internal food safety experts as well as suppliers and outside experts, supports the Company’s food safety risk management work and provides strategic global leadership for all aspects of food safety and quality. The Company also has ongoing programs to elevate food safety culture throughout the business by educating employees about food safety practices, including proper storage, handling and preparation of food for customers, and encouraging markets, suppliers and restaurant operators to share best practices on food safety and quality.
The Company collaborates with suppliers to encourage innovation and drive continuous improvement across its global supply chain. The Company also works closely with suppliers and other third-party experts to drive sustainable sourcing initiatives and to improve the health and welfare of the animals within its supply chain. Led by its Global Chief Supply Chain Officer, the Company has a comprehensive strategy that its global supply chain organization leverages to identify, assess, and manage risk in its supply chain.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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MANAGEMENT'S VIEW OF THE BUSINESS
In analyzing business trends, management reviews results on a constant currency basis and considers a variety of performance and financial measures, some of which are considered to be non-GAAP, including comparable sales and guest count growth, Systemwide sales growth, after-tax return on invested capital from continuing operations, free cash flow and free cash flow conversion rate, as described below. Management believes these measures are important in understanding the financial performance of the Company.
•Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.
•Comparable sales and comparable guest counts are compared to the same period in the prior year and represent sales and transactions, respectively, at all restaurants, whether owned and operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, natural disasters, pandemics and acts of war, terrorism or other hostilities. Comparable sales exclude the impact of currency translation and the sales of any market considered hyperinflationary (generally identified as those markets whose cumulative inflation rate over a three-year period exceeds 100%), which management believes more accurately reflects the underlying business trends. Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.
•Systemwide sales include sales at all restaurants, whether owned and operated by the Company or by franchisees. Systemwide sales to loyalty members are comprised of all sales to customers who self-identify as a loyalty member when transacting with both Company-owned and operated and franchised restaurants. Systemwide sales to loyalty members are measured across 70 markets with loyalty programs. Systemwide sales to loyalty members represents an aggregation of the prior four quarters of sales to loyalty members active in the last 90 days of the respective quarter. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The Company's revenues consist of sales by Company-owned and operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Changes in Systemwide sales are primarily driven by comparable sales and net restaurant unit expansion.
•The Company’s after-tax return on invested capital ("ROIC") from continuing operations is a metric that management believes measures capital-allocation effectiveness over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies. Refer to the reconciliation in Exhibit 99.1 to this Form 10-K for further information on the Company's calculation of ROIC.
•Free cash flow, defined as cash provided by operations less capital expenditures, and free cash flow conversion rate, defined as free cash flow divided by net income, are measures reviewed by management in order to evaluate the Company’s ability to convert net profits into cash resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value. Refer to the reconciliations in Exhibit 99.1 to this Form 10-K for further information on the Company's calculations of free cash flow and free cash flow conversion rate.
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2025 FINANCIAL PERFORMANCE
In 2025, global comparable sales increased 3.1%.
•Comparable sales in the U.S. increased 2.1%, benefiting from average check growth.
•Comparable sales in the International Operated Markets increased 3.2%, reflecting positive comparable sales in nearly all markets, led by Germany and Australia.
•Comparable sales in the International Developmental Licensed Markets increased 4.6%. Positive comparable sales were led by Japan, with all geographic regions reflecting positive comparable sales.
Earnings and cash flow growth rates presented below were impacted in 2025 and 2024 by restructuring charges associated with Accelerating the Organization. Additionally, 2024 results were also impacted by net charges primarily consisting of transaction costs, property sale gains and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel.
Current year and prior year charges and gains are detailed along with reconciliations to the non-GAAP measures in the Net Income and Diluted Earnings Per Share section on page 13 and Operating Income section on page 18 in this Form 10-K.
In addition to the comparable sales results above, the Company had the following financial results in 2025:
•Consolidated revenues increased 4% (2% in constant currencies) to $26.9 billion.
•Systemwide sales increased 7% (5% in constant currencies) to $139.4 billion.
•Consolidated operating income increased 6% (4% in constant currencies) to $12.4 billion.
•Operating margin, defined as operating income as a percent of total revenues, increased from 45.2% in 2024 to 46.1% in 2025.
•Diluted earnings per share of $11.95 increased 5% (4% in constant currencies).
•Cash provided by operations was $10.6 billion, a 12% increase from the prior year.
•Capital expenditures of $3.4 billion were mainly allocated to new restaurant openings and, to a lesser extent, to reinvestment in existing restaurants.
•Free cash flow was $7.2 billion, an 8% increase from the prior year.
•Across the System, nearly 2,300 new restaurants (including those in our developmental licensee and affiliated markets) were opened.
•The Company increased its quarterly cash dividend per share by 5% to $1.86 for the fourth quarter, equivalent to an annual dividend of $7.44 per share. The Company returned a total of $7.1 billion to shareholders through dividends and share repurchases in 2025.
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STRATEGIC DIRECTION
The Company’s Accelerating the Arches growth strategy (the “Strategy”) encompasses all aspects of McDonald’s business as the leading global omni-channel restaurant brand. Our Strategy reflects the Company’s purpose, mission and values, as well as growth pillars that build on the Company’s competitive advantages. The Company's guiding purpose, mission and values are discussed in a dedicated section on page 4 of this Form 10-K.
GROWTH PILLARS
The following growth pillars, M-C-D, build on historic strengths and articulate areas of further opportunity. Under our Strategy, the Company will:
•Maximize our Marketing by investing in new, culturally relevant approaches, grounded in fan truths, to effectively communicate the story of our brand, food and purpose. The Company continues to build relevance with customers through emotional connections and world class creative, which are central to the brand’s “Feel-Good Marketing” approach. This is exemplified by campaigns that elevate the entire brand and continue to be scaled around the globe to connect with customers in authentic and relatable ways. The Company is committed to a marketing strategy that highlights value at every tier of the menu, as providing delicious and affordable menu options remains a cornerstone of the McDonald’s brand. This includes everyday low-price options on our menu, affordable meal bundles, limited-time deals and personalized value and digital offers available in our mobile app.
•Commit to the Core menu by tapping into customer demand for the familiar and focusing on serving our iconic products that are beloved by customers around the world such as our World Famous Fries, Big Mac, Quarter Pounder and Chicken McNuggets, which are some of our seventeen unique billion-dollar brands. Building on its foundational strength with burgers, the Company will continue to evolve and innovate its longest-standing menu item with plans to continue to implement “Best Burger”; a series of operational and formulation changes designed to deliver hotter, juicier, tastier burgers to nearly all markets by the end of 2026. Further, the Company is focused on continuing to gain share in the rapidly growing chicken category, as we continue to aggressively grow our chicken brands. This includes offering the McCrispy sandwich, which was deployed in nearly all major markets by the end of 2025 and the extension of the McCrispy brand into strips and wraps in several markets. These innovations and new menu offerings reflect the Company's ability to meet evolving customer preferences. The Company also continues to see a significant opportunity with beverages to drive long-term growth.
•Double Down on the 4D's: Digital, Delivery, Drive Thru and Restaurant Development by continuing to leverage competitive strengths and building a powerful digital experience growth engine to deliver a personalized and convenient customer experience. As another way to unlock further growth, the Company plans to continue to accelerate the pace of restaurant openings and technology innovation so that whenever and however customers choose to interact with McDonald’s, they can enjoy a fast, easy experience that meets their needs.
◦Digital: The Company’s digital experience is transforming how customers order, pay and receive their food. Through digital tools, customers can access personalized offers, participate in a loyalty program, order through our mobile app and receive McDonald's food through the channel of their choice. We are also providing increased convenience to customers through “Ready on Arrival”; a digital enhancement that enables crew to begin assembling a customer's mobile order prior to arrival at the restaurant to expedite service and elevate customer satisfaction. The Company successfully deployed this initiative in its top six markets by the end of 2025. The Company has loyalty programs in 70 markets, including nearly all major markets. McDonald's loyalty customers have proven to be highly engaged, and the Company plans to increase its 90-day active users to 250 million by the end of 2027. Further, the Company plans to grow its annual Systemwide sales to loyalty members to $45.0 billion by the end of 2027.
◦Delivery: The Company offers delivery from nearly 41,000 restaurants across approximately 100 markets, representing approximately 90% of McDonald's restaurants. The Company is continuing to build on and enhance the delivery experience for customers, including adding the ability to place a delivery order in our mobile app (a feature that is currently available in five of the Company’s top markets). The Company continues to scale this capability and expects to increase the percentage of Systemwide delivery sales originating from our mobile app to 30% by the end of 2027. The Company also has long-term strategic partnerships with delivery providers that continue to benefit the Company, customers and franchisees by optimizing operational efficiencies and creating a seamless customer experience.
◦Drive Thru: The Company has the most drive thru locations worldwide, with nearly 29,000 drive thru locations globally, including over 95% of the approximately 13,700 locations in the U.S. This channel remains a competitive advantage in meeting customers’ demand for flexibility and choice. McDonald’s network currently provides unmatched scale and convenience for customers, while also offering significant growth opportunities, such as adding additional drive thru lanes to increase capacity and improve speed and efficiency. The Company continues to build on its drive thru advantage, as the vast majority of new restaurant openings in the U.S. and International Operated Markets will include a drive thru.
◦Restaurant Development: The Company will continue to accelerate the pace of restaurant openings to attempt to fully capture the demand being driven through our Strategy in many of our largest markets. In 2026, the Company plans to open approximately 2,600 new restaurants (gross) across the globe, which will contribute to slightly over 4.5% new unit growth (net of closures). Further, the Company continues to build on its industry-leading development, by progressing toward the targeted expansion to 50,000 restaurants by the end of 2027, which would make it the fastest period of restaurant unit growth in Company history.
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FOUNDATION AND PLATFORMS
Foundational to our Strategy is keeping the customer and restaurant crew at the center of everything the Company does, along with focusing relentlessly on running great restaurants, empowering our people and continuing to modernize our ways of working. Further, as part of the Company’s plans for long term growth and solidifying McDonald’s leadership position, the Company will continue to develop and implement three technology-enabled platforms designed to build our competitive advantages, cement our place in culture and stay one step ahead of our customers’ expectations. Together, our foundation and platforms will extend the Company’s leadership position and unlock new growth opportunities and efficiencies for our business over the long-term.
Our platforms are:
•Consumer: The Company is building one of the world’s largest consumer platforms to fuel engagement, which will bring together the best of our brand and utilize our physical and digital competitive advantages. The consumer platform will enable the Company to accelerate growth in our loyalty program and drive valuable loyalty customers to visit more frequently.
•Restaurant: The Company is building the easiest and most efficient restaurant operating platform which enables the Company and franchisees to run restaurants more efficiently and utilize the latest cloud-based technology to make it easier for restaurant crew to deliver exceptional customer service. The Company intends to deploy new, universal software that all McDonald’s restaurants will run on, enabling restaurants to roll out innovation even faster, with less complexity and more reliability; and customers will enjoy a more familiar, consistent experience.
•Company: The Company is building a modern company platform, through our Global Business Services (GBS) organization, that unlocks speed and innovation throughout the organization, to enable further growth as it modernizes the way it works by focusing on becoming faster, more innovative and more efficient at solving problems for its customers and people.
Our Strategy is aligned with the Company’s capital allocation philosophy of: (i) invest in opportunities to grow the business and drive strong returns, including both capital expenditures as well as investments in technology, digital, and our GBS organization, (ii) prioritize our dividend and (iii) repurchase shares with remaining free cash flow over time.
The Company believes our Strategy builds on our inherent strengths by harnessing the Company’s competitive advantages while leveraging its size, scale, agility and the power of the McDonald’s brand to adapt and adjust to meet customer demands in varying economic environments, including the current industry-wide challenges associated with more discerning consumer spending. Our Strategy is supported by a strong global senior leadership team aimed at executing against the MCD growth pillars, further developing our three platforms and driving long-term growth through increasing guest counts and growing industry market share.
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OUTLOOK
Based on current conditions, the following is provided to assist in forecasting the Company's future results.
•The Company expects net restaurant unit expansion will contribute approximately 2.5% to 2026 Systemwide sales growth, in constant currencies.
•The Company expects full year 2026 Selling, general and administrative expenses of about 2.2% of Systemwide sales.
•The Company expects 2026 operating margin percent to be in the mid-to-high 40% range.
•Based on current interest and foreign currency exchange rates, the Company expects interest expense for the full year 2026 to increase between 4% and 6% driven primarily by higher average interest rates.
•The Company expects the effective income tax rate for the full year 2026 to be between 21% and 23%. Some volatility may result in a quarterly tax rate outside of the annual range.
•The Company expects 2026 capital expenditures to be between $3.7 and $3.9 billion, with the majority directed towards new restaurant unit expansion across the U.S. and International Operated Markets. Globally, the Company expects to open approximately 2,600 restaurants in 2026, with about 750 restaurants opening in the U.S. and International Operated Markets, and developmental licensees and affiliates contributing capital towards more than 1,800 restaurant openings in their respective markets. The Company expects approximately 2,100 net restaurant additions in 2026. The Company also expects a sequential increase in capital expenditures of about $300 million to $500 million for 2027, targeting 50,000 global units by the end of 2027.
•The Company expects to achieve a free cash flow conversion rate in the low-to-mid 80% range for 2026.
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CONSOLIDATED OPERATING RESULTS
The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes beginning on page 38 of this Form 10-K. This section generally discusses 2025 and 2024 items and the year-to-year comparisons between the years ended December 31, 2025 and 2024. Discussions of 2023 items and the year-to-year comparisons between the years ended December 31, 2024 and 2023 are not included in their entirety in this Form 10-K and can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.
Certain columns and rows in financial tables within management's discussion and analysis of financial condition and results of operations may not add due to rounding. Percentages have been calculated from the underlying whole-dollar amounts for all periods presented.
| Operating results | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Dollars and shares in millions, except per share data | Amount | Increase/ (decrease) | Amount | Increase/ (decrease) | Amount | |||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Revenues from franchised restaurants | $ | 16,548 | 5 | % | $ | 15,715 | 2 | % | $ | 15,437 | ||||||||||||||||||||||||||||
| Sales by Company-owned and operated restaurants | 9,690 | (1) | 9,782 | — | 9,742 | |||||||||||||||||||||||||||||||||
| Other revenues | 647 | 53 | 423 | 34 | 316 | |||||||||||||||||||||||||||||||||
| Total revenues | 26,885 | 4 | 25,920 | 2 | 25,494 | |||||||||||||||||||||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||||||||||||||||||||
| Franchised restaurants-occupancy expenses | 2,618 | 3 | 2,536 | 2 | 2,475 | |||||||||||||||||||||||||||||||||
| Company-owned and operated restaurant expenses | 8,268 | (1) | 8,334 | 1 | 8,224 | |||||||||||||||||||||||||||||||||
| Other restaurant expenses | 564 | 66 | 339 | 46 | 232 | |||||||||||||||||||||||||||||||||
| Selling, general & administrative expenses | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 457 | 2 | 447 | 17 | 382 | |||||||||||||||||||||||||||||||||
| Other | 2,583 | 7 | 2,412 | (1) | 2,435 | |||||||||||||||||||||||||||||||||
| Other operating (income) expense, net | 2 | (98) | 139 | 41 | 99 | |||||||||||||||||||||||||||||||||
| Total operating costs and expenses | 14,492 | 2 | 14,208 | 3 | 13,847 | |||||||||||||||||||||||||||||||||
| Operating income | 12,393 | 6 | 11,712 | 1 | 11,647 | |||||||||||||||||||||||||||||||||
| Interest expense | 1,582 | 5 | 1,506 | 11 | 1,361 | |||||||||||||||||||||||||||||||||
| Nonoperating (income) expense, net | (87) | (38) | (139) | (41) | (236) | |||||||||||||||||||||||||||||||||
| Income before provision for income taxes | 10,897 | 5 | 10,345 | (2) | 10,522 | |||||||||||||||||||||||||||||||||
| Provision for income taxes | 2,334 | 10 | 2,121 | 3 | 2,053 | |||||||||||||||||||||||||||||||||
| Net income | $ | 8,563 | 4 | % | $ | 8,223 | (3) | % | $ | 8,469 | ||||||||||||||||||||||||||||
| Earnings per common share—diluted | $ | 11.95 | 5 | % | $ | 11.39 | (1) | % | $ | 11.56 | ||||||||||||||||||||||||||||
Weighted-average common shares outstanding— diluted | 716.4 | (1) | % | 721.9 | (1) | % | 732.3 | |||||||||||||||||||||||||||||||
IMPACT OF FOREIGN CURRENCY TRANSLATION
The impact of foreign currency translation on consolidated operating results in 2025 primarily reflected the strengthening of most major currencies against the U.S. Dollar, partly offset by the weakening of the Australian Dollar and Canadian Dollar.
While changes in foreign currency exchange rates affect reported results, McDonald's mitigates exposures, where practical, by purchasing goods and services in local currencies, financing in local currencies and hedging certain foreign-denominated cash flows. Results excluding the effect of foreign currency translation (referred to as constant currency) are calculated by translating current year results at prior year average exchange rates.
Impact of foreign currency translation on reported results
| Reported amount | Currency translation benefit/(cost) | |||||||||||||||||||||||||||||||||||
| In millions, except per share data | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Revenues | $ | 26,885 | $ | 25,920 | $ | 25,494 | $ | 385 | $ | (57) | $ | 22 | ||||||||||||||||||||||||
| Franchised margins | 13,930 | 13,178 | 12,962 | 190 | (31) | 23 | ||||||||||||||||||||||||||||||
| Company-owned and operated margins | 1,422 | 1,447 | 1,517 | 24 | (9) | 1 | ||||||||||||||||||||||||||||||
| Selling, general & administrative expenses | 3,039 | 2,858 | 2,817 | (18) | — | (3) | ||||||||||||||||||||||||||||||
| Operating income | 12,393 | 11,712 | 11,647 | 198 | (46) | 19 | ||||||||||||||||||||||||||||||
| Net income | 8,563 | 8,223 | 8,469 | 114 | (41) | 30 | ||||||||||||||||||||||||||||||
| Earnings per common share—diluted | 11.95 | 11.39 | 11.56 | 0.16 | (0.06) | 0.04 | ||||||||||||||||||||||||||||||
McDonald's Corporation 2025 Annual Report 12
NET INCOME AND DILUTED EARNINGS PER COMMON SHARE
In 2025, net income increased 4% (3% in constant currencies) to $8,563 million and diluted earnings per common share increased 5% (4% in constant currencies) to $11.95. Foreign currency translation had a positive impact of $0.16 on diluted earnings per share.
2025 results included:
•Net pre-tax charges of $229 million, or $0.25 per share, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working (Accelerating the Organization)
2024 results included:
•Pre-tax charges of $221 million, or $0.25 per share, primarily related to restructuring charges associated with Accelerating the Organization
•Net pre-tax charges of $70 million, or $0.08 per share, which primarily consisted of transaction costs, property sale gains and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel
Outlined below is additional information for the full year 2025 and 2024:
| Net Income Reconciliation | ||||||||||||||||||||||||||||||||||
| Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | |||||||||||||||||||||||||||||||
| GAAP net income | $ | 8,563 | $ | 8,223 | 4 | % | 3 | % | ||||||||||||||||||||||||||
| (Gains)/Charges, net of tax | 178 | 236 | ||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 8,741 | $ | 8,459 | 3 | % | 2 | % | ||||||||||||||||||||||||||
| Diluted Earnings Per Common Share Reconciliation | |||||||||||||||||||||||||||||||
| Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | ||||||||||||||||||||||||||||
| GAAP earnings per share-diluted | $ | 11.95 | $ | 11.39 | 5 | % | 4 | % | |||||||||||||||||||||||
| (Gains)/Charges | 0.25 | 0.33 | |||||||||||||||||||||||||||||
| Non-GAAP earnings per share-diluted | $ | 12.20 | $ | 11.72 | 4 | % | 3 | % | |||||||||||||||||||||||
The increase in 2025 net income and diluted earnings per common share was primarily driven by higher sales-driven Franchised margins.
The Company repurchased 6.7 million shares of its stock for $2.0 billion in 2025 and 10.1 million shares of its stock for $2.8 billion in 2024.
McDonald's Corporation 2025 Annual Report 13
REVENUES
The Company's revenues consist of fees from restaurants owned and operated by franchisees, developmental licensees and affiliates and sales by Company-owned and operated restaurants. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimum rent payments, and initial fees. Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales, and generally include initial fees. The Company’s Other revenues are primarily comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology and digital platforms and revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand.
Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at December 31, 2025. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.
| Revenues | ||||||||||||||||||||||||||||||||||||||||||||||
| Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | 2025 | 2024 | 2023 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| Franchised revenues: | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 7,371 | $ | 7,211 | $ | 7,163 | 2 | % | 1 | % | 2 | % | 1 | % | ||||||||||||||||||||||||||||||||
| International Operated Markets | 7,279 | 6,746 | 6,549 | 8 | 3 | 5 | 3 | |||||||||||||||||||||||||||||||||||||||
| International Developmental Licensed Markets & Corporate | 1,898 | 1,758 | 1,724 | 8 | 2 | 7 | 5 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 16,548 | $ | 15,715 | $ | 15,437 | 5 | % | 2 | % | 4 | % | 2 | % | ||||||||||||||||||||||||||||||||
| Company-owned and operated sales: | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 3,115 | $ | 3,197 | $ | 3,221 | (3) | % | (1) | % | (3) | % | (1) | % | ||||||||||||||||||||||||||||||||
| International Operated Markets | 6,131 | 5,713 | 5,702 | 7 | — | 5 | — | |||||||||||||||||||||||||||||||||||||||
| International Developmental Licensed Markets & Corporate | 443 | 872 | 819 | (49) | 6 | n/m | 9 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 9,690 | $ | 9,782 | $ | 9,742 | (1) | % | — | % | (2) | % | 1 | % | ||||||||||||||||||||||||||||||||
| Total Franchised revenues and Company-owned and operated sales: | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 10,487 | $ | 10,407 | $ | 10,384 | 1 | % | — | % | 1 | % | — | % | ||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-10 | Erlinger Joseph M. | President, McDonald's USA | Sell | -5,252 | $284.32 | -$1,493,249 |
| 2026-05-28 | Ralls-Morrison Desiree | EVP, Chief Legal Officer | Sell | -2,763 | $278.36 | -$769,109 |
| 2026-05-26 | Erlinger Joseph M. | President, McDonald's USA | Sell | -333 | $280.11 | -$93,277 |
| 2026-04-23 | Erlinger Joseph M. | President, McDonald's USA | Sell | -333 | $302.72 | -$100,806 |
| 2026-04-10 | Erlinger Joseph M. | President, McDonald's USA | Sell | -2,626 | $307.00 | -$806,182 |
| 2026-03-23 | Erlinger Joseph M. | President, McDonald's USA | Sell | -333 | $313.47 | -$104,386 |
| 2026-03-18 | Baroni Dario | President, IDL | Sell | -600 | $323.77 | -$194,262 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-04 10-Q expected by 2026-08-07 (in 50 days)
- ~2026-11-03 10-Q expected by 2026-11-06 (in 141 days)
- ~2027-02-24 10-K expected by 2027-03-02 (in 254 days)
- ~2027-05-05 10-Q expected by 2027-05-08 (in 324 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-07 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-07 10-Q Quarterly Report
- 2026-04-07 DEF 14A Proxy Statement
- 2026-04-02 8-K/A Officer/Director Change
- 2026-02-24 10-K Annual Report
- 2026-02-11 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-10 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-11-05 10-Q Quarterly Report
- 2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-27 8-K Other Events; Financial Statements and Exhibits
- 2025-08-06 10-Q Quarterly Report
- 2025-08-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-12 10-Q Quarterly Report
- 2025-05-01 8-K Earnings Release; Financial Statements and Exhibits
- 2025-03-11 8-K Officer/Director Change