MCD · Q4 2025 Earnings

Bullish

McDonald's

Reported February 11, 2026

30-second summary

U.S. comparable sales accelerated to +6.8% from +2.4% in Q3 FY2025 — the cleanest validation possible that the September EVM reset is working, and a quarter ahead of the corporate-support glidepath ending. Management responded by raising FY2026 capex 23% to $3.7–3.9B, lifting gross openings to ~2,600 and net adds to ~2,100, and telling investors to expect operating margin expansion from FY2025's 46.9% adjusted base. The cautious posture that defined Q2 and Q3 FY2025 is gone; this is the most assertive McDonald's print in at least four quarters.

Headline numbers

EPS

Q4 FY2025

$3.12

Revenue

Q4 FY2025

$7.01B

+9.7% YoY

Operating margin

Q4 FY2025

45.0%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$7.01B	+9.7%	$7.08B	-1.0%
EPS	$3.12	—	$3.22	-3.1%
Operating margin	45.0%	—	47.4%	-240bps

Guidance

McDonald's raised FY2026 capital intensity and unit expansion targets significantly while maintaining margin and FCF conversion guidance, signaling accelerated growth investment with confidence in operational leverage.

Guidance is issued for both next quarter and the full year. Both may appear below.

New guidance

Metric	Period	Guide	YoY
Net restaurant unit expansion contribution to Systemwide sales growth	FY 2026	approximately 2.5%	—
Foreign currency benefit to EPS	FY 2026	20 to 30 cents	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Operating margin percent	FY 2026	mid-to-high 40% range	mid-to-high 40% range	incremental expansion from FY2025 46.9% adjusted	Raised
Interest expense growth	FY 2026	increase about 4%	4% to 6% increase	+2pts at high end	Raised
Effective income tax rate	FY 2026	between 21% and 22%	between 21% and 23%	+1pt at high end	Raised
Capital expenditures	FY 2026	$3.0 to $3.2 billion	$3.7 to $3.9 billion	+$0.7-$0.7 billion (23% increase at midpoint)	Raised
Gross restaurant openings	FY 2026	approximately 2,200 restaurants	approximately 2,600 restaurants	+400 restaurants (18% increase)	Raised
Net restaurant additions	FY 2026	nearly 1,800	approximately 2,100	+300 units (17% increase)	Raised

Reaffirmed unchanged this quarter: SG&A as % of Systemwide sales (about 2.2%), Free cash flow conversion rate (low-to-mid 80% range)

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
Franchised Revenues - U.S.	$1.886B	+5.1%
Franchised Revenues - International Operated Markets	$1.924B	+12.8%
Franchised Revenues - International Developmental Licensed Markets & Corporate	$0.5B	+9.2%
Company-owned and operated sales - U.S.	$0.81B	+3.8%
Company-owned and operated sales - International Operated Markets	$1.614B	+12.6%

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Comparable Sales Growth - Total Company	5.7%
Comparable Sales Growth - U.S.	6.8%
Comparable Sales Growth - International Operated Markets	5.2%
Systemwide Sales Growth - Total Company	11%
Franchised Sales - Total	$34.018 billion

Profitability

Q4 FY2025

Segment	Q4 FY2025
Operating Margin	45.0%
Franchised Restaurant Margins	$3.632 billion
Free Cash Flow Conversion Rate (FY2025)	84%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
U.S. Revenue	$2.696B	+4.7%
International Operated Markets Revenue	$3.538B	+12.6%
International Developmental Licensed Markets & Corporate Revenue	$0.613B	+10.8%

Management tone

Q1 promotional value re-engagement → Q2 bifurcation called structural, margin guide quietly cut → Q3 macro pressure extended "well into 2026," EVM as load-bearing → Q4 confident pivot to capacity expansion

Value moved from "DNA" defensive framing to measurable share gains with low-income consumers. Three quarters of escalation: Q2 framed value as needing a core-menu reset; Q3 elevated value to "foundational expectation of our brand" while management conceded macroeconomic constraints were exogenous. This quarter the language flipped to offense: "Together with McValue and Exciting Marketing, we gained share with low income consumers in December, and we've seen a meaningful increase in our value and affordability scores." The same low-income cohort that printed double-digit traffic declines for eight straight quarters is now a share-gain story. That is the single biggest tonal break of the year.

The "well into 2026" caution from Q3 has been functionally retired. Last quarter Kempczinski explicitly told investors that consumer pressure would persist well into 2026; this quarter the framing is "we believe McDonald's is well positioned to benefit disproportionately relative to our competitors" if the environment improves. The macro is no longer the binding constraint in management's narrative — execution is. This is a meaningful walk-back, and the 23% capex raise is the financial expression of it.

Margin expansion is now explicit rather than aspirational. Q2's company-operated margin reset to 14.8% and Q3's quiet withdrawal of that target had moved margin from algorithm to defense. This quarter management not only reaffirmed the mid-to-high 40% range but added the new explicit anchor: "we expect our operating margin to be in the mid to high 40 percent range and to expand from our 46.9% adjusted operating margin in 2025." The word "expand" against a specific baseline is the cleanest commitment to margin growth in four quarters.

Organizational structure has been promoted from inherited to competitive weapon. "It's been nine months since we established the global restaurant experience team...our new integrated structure sets us up to execute with greater pace, which means ideas can start showing up in our restaurants even sooner." The category-leader architecture (beef, beverages, chicken with dedicated accountability) is being framed as the mechanism by which the three-for-three model scales — a structural advantage, not a reorg.

Confidence in the execution model is now declared, not implied. Kempczinski: "When we execute, we know we can outperform the competition in any environment." That is a more decisive statement than McDonald's typically makes about its competitive moat; it presumes the operating model itself is the edge, independent of macro.

Recurring themes management leaned on this quarter:

Three-for-three execution model (value, marketing, menu innovation)Taste and quality as primary customer need, replacing value as top priorityOrganizational transformation enabling speed and scaleLoyalty app as behavioral multiplier and customer frequency driverShare gains across geographies (US low-income, UK turnaround, Germany, Australia)Restaurant expansion acceleration (2,275 in 2025, targeting 2,600 in 2026, 50,000 by end-2027)

Risks management surfaced:

Challenging industry backdrop in QSR sector remainsMacroeconomic pressures in ChinaForeign exchange volatility (noted as directional guidance only)Interest expense increases 4-6% due to higher average ratesQuarterly tax rate volatility outside 21-23% annual range

Q&A highlights

Dennis Geiger · UBS

How is McDonald's thinking about U.S. sales trajectory in 2026, and how will the company execute on the three-for-three formula (value, marketing, innovation) to drive U.S. sales growth?

Management outlined a comprehensive strategy anchored on McValue and EVM as foundational value programs, strong marketing activations (Minecraft, Monopoly, Grinch), and menu innovation in beverages, burgers, and chicken. They emphasized execution with franchisees and highlighted Q4 positive guest count growth and strongest comp guest count gap to competitive set in recent history as proof points.

McValue and EVM positioned as foundation for value program in 2026Q4 U.S. had positive guest count growthU.S. business had strongest comp guest count gap to near-end competitive set in Q4 in recent historyStrong pipeline of menu news lined up for 2026

Sarah Salitor · Bank of America

Which approach to value was more powerful—systematized meals with 15% discount or sharp price points at $5 and $8—and how does this support restaurant-level margins given they were flattish year-over-year?

Management stated both approaches are complementary rather than one-or-the-other: predictable everyday value (EVM) is foundational, while price-pointed items provide incremental excitement. They addressed margin pressure by emphasizing strong top-line growth as the key driver of margin expansion, noting Q4 margin growth despite inflation earlier in year, and highlighted owner-operator cash flow was up year-over-year.

U.S. owner-operator average cash flow up year-over-yearMargins grew in Q4 including in U.S. on back of strong top-line growthEVM strategy viewed as working well by franchisees based on business resultsThree-for-three formula must be executed together to drive sustainable profitability

Brian Harbert · Morgan Stanley

Why is capital budget up $1.5 billion versus 2023, and is aggressive unit growth driven by taking market share during industry stress or by confidence in returns in mature markets like the U.S.?

Management explained capital increase is on track with December 2023 Investor Day plan of $300-500 million annual increases toward 1,000 gross openings in wholly-owned markets by 2027. 2025 was slightly above range due to FX headwinds and accelerated openings. They emphasized disciplined site selection based on deep analysis of geographic gaps, with confirmation that first-year sales and returns meet expectations in new U.S. locations.

2025 capital spend: $3.4 billionExpected 2026 capital increase: $300-500 millionTarget: 1,000 gross openings in wholly-owned markets by 2027First-year sales and returns in new U.S. sites meeting expectations

David Tarantino · Baird

How are franchisees embracing the U.S. value strategy, particularly regarding financial support phase-out and new brand standards' implications for core menu pricing strategy going forward?

Management reported good franchisee enthusiasm when cash flows are positive and business momentum is strong, noting relative outperformance to competitors helps sentiment. On support rolloff: they stated support is timely, targeted, and temporary, with franchisees understanding EVM strategy works. On pricing: while franchisees set prices, McDonald's as brand custodians expects protection of value positioning core to brand DNA; RGM tools are provided but pricing decisions are franchisee responsibility.

EVM support already rolled off in many locationsCompany support is 'timely, targeted, and temporary' and does not subsidize pricing permanentlyFranchisees set pricing but must protect brand value positioningCore to brand DNA is value leadership established by Ray Kroc

Answers to last quarter's watch list

Whether U.S. Q4 comps accelerate above 3.5% — Yes, decisively. U.S. comps printed +6.8%, nearly 3x the Q3 base of +2.4% and well above the 3.5% bar. Q4 also delivered positive guest count growth and what management called the strongest comp guest count gap to the near-end competitive set in recent history.

Resolved positively

Whether the FY2025 company-operated margin guide returns in Q4 disclosure — No specific company-operated margin figure was reinstated, but the substitute disclosure is arguably stronger: management anchored FY2026 expectations to the FY2025 adjusted operating margin of 46.9% and committed to expansion from that base. U.S. company-operated sales also returned to growth at +3.8% in Q4, which removes much of the urgency around the original watch.

Resolved positively

2026 framework on the Q4 call — The 2026 framework is materially more bullish, not less. Capex was raised 23%, openings raised 18%, net adds raised 17%, unit-expansion contribution raised to ~2.5%, and operating margin was committed to expanding from the 46.9% base. The "mid-to-high 40%" range survived; the underlying confidence beneath it is higher than at any point in 2025.

Resolved positively

Franchisee receptivity at the end of corporate support — Management said EVM support has already rolled off in many locations and described owner-operator average cash flow as up year-over-year; recent franchisee engagement in Dallas was described as enthusiastic. The Q4 U.S. comp print and guest count gap are the strongest indirect evidence that franchisee participation held. The full Q2 FY2026 read won't be visible until next quarter.

Continue monitoring

Low-income traffic — Fully inverted. Management cited share gains with low-income consumers in December and meaningful improvement in value and affordability scores. The eight-quarter double-digit decline narrative was not repeated in this call.

Resolved positively

What to watch into next quarter

Whether Q1 FY2026 U.S. comps sustain above +4% as EVM corporate support fully rolls off — Q4's +6.8% was helped by Monopoly, holiday marketing and the food-safety lap; Q1 is the cleanest test of EVM's self-sustaining unit economics for franchisees, and a print at or below the Q3 +2.4% level would reopen the franchisee-support question

Whether the implied FY2026 capex step-up translates to visible opening pace in Q1 — the +400 incremental restaurants need to show up; openings materially below ~600 in Q1 would call the 2,600 full-year figure into question and suggest the capex raise is timing-loaded

Whether Q1 FY2026 operating margin expands YoY — management explicitly committed to expansion from the 46.9% FY2025 adjusted level; the first checkpoint is whether Q1 prints above prior-year despite the 4–6% interest expense growth and the $0.20–0.30 FY FX tailwind already baked in

Whether low-income share gains compound or fade — December was the first month of evidenced share gains; January–February is the first cycle without the holiday marketing push, and a reversion would suggest the December print was a promotional anomaly rather than a structural inflection

Whether the tax-rate ceiling moves above 23% or interest expense growth exceeds 6% — both crept higher this quarter without explicit acknowledgment; another widening would be the hidden tell that the cost-side picture is deteriorating faster than management is signaling

Sources

McDonald's Q4 FY2025 8-K / Earnings Release: https://www.sec.gov/Archives/edgar/data/63908/000006390826000032/exhibit992-12312025.htm
McDonald's Q4 FY2025 earnings call (prepared remarks and Q&A)
McDonald's Q3 FY2025 8-K / Earnings Release (for prior guidance baseline)

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