麦当劳

After a multiyear push to modernize its disparate technology systems, boost loyalty adoption, and accelerate unit growth, McDonald's investor day outlined plans to better leverage its integrated data, remodel its stores, support franchisees, and win market share amid broader industry angst.

Why it matters: Although traffic pressure isn't likely to turn quickly, McDonald's is working to defend franchisee cash flows over the long haul by co-funding store remodels, extracting unit-level efficiencies, and spurring growth through menu innovation and customer engagement. We now expect negative third-quarter US comps (below our 1% estimate) and agree with management that industry traffic stays depressed until inflation eases. We see few catalysts this year, with franchisee value talks ongoing, promotions eased to aid operations, and major menu upgrades longer term. McDonald's is prudently funneling $8.5 billion into franchisee investment through 2036, as it has before. We also expect 18% store-level margins in 2030 (up 330 basis points from 2025), aided by efficiency gains. This is critical to franchisees' health and their ability to reinvest long term.

The bottom line: We expect to trim our $295 fair value estimate for wide-moat McDonald's by a mid- to high-single-digit percentage and maintain our Exemplary Capital Allocation Rating. We believe shares are undervalued after a 5% price dip. The reduction is driven by tepid near-term performance, fewer store builds, and franchisee investment, partly offset by better general and administrative expense leverage. Coupled with refranchising, we expect to lift our 49.3% 2030 operating margin toward its low- to mid-50% range. We think that investors are balking at the remodeling and rent relief, coupled with expectations for a lackluster near term. In our view, stronger customer engagement, better menu innovation, and a refreshed store base should help the firm return to over 3% comp growth over the long haul.

To bolster its value proposition and same-store sales growth, McDonald's reaffirmed its commitment to menu innovation. We continue to find favor with its expanded beverage program, which supports 50% higher average checks, and half of transactions occur during low-traffic times. The firm is adding new espresso machines and alternative milk options to international markets and expects to complete the US rollout in 2027. Meanwhile, we thought hand-breaded chicken offerings (like wings, tenders, and sandwiches) should find wide appeal, though they could take time to implement given the more labor-intensive model. In our view, future grilled chicken options and protein beverages seemed more immediate and intriguing for GLP-1 users, and the firm said its existing menu already captures 84% of users, with better offerings helping them engage further.

On efficiency, we see potential gains through a slew of AI-powered initiatives spanning labor deployment, inventory (including Bluetooth Low Energy tags), and pricing management, to name a few, which should bolster franchisee profits in the long run. Additionally, the firm is confident it can expand its automated drive-through window. While we're skeptical of the immediate opportunity and widespread appeal, its ability to recognize guest preferences and personalize was impressive and could translate into savings and higher checks. Further initiatives embedded in the firm's remodeling program should also translate into operational savings.

McDonald's also outlined an opportunity to enter the retail media business by running ads on platforms such as its drive-thru displays after a customer places an order. While questions remain about how quickly it can scale this initiative to $1 billion without hurting the customer experience, it seems plausible given its extensive footprint and traffic. For context, more than 85% of the US population visits its stores at least once a year, which we believe makes it attractive to advertisers.

We’ve lowered our fair value estimate for McDonald’s to $270 from $295, primarily due to a slightly more conservative five-year unit growth forecast of 3.7%, down from 4.1%. We expect the firm to adopt a more disciplined approach to unit expansion following a period of outsize growth, in order to preserve strong unit-level economics and refocus on delivering remodels amid broader pressures that we suspect could impact returns on new units. We've also nudged down our five-year average comparable sales estimate to 3.1% from 3.6% previously, reflecting a more challenging global consumer environment than we had anticipated. Our valuation implies a 2027 enterprise value/EBITDA multiple of 16 times.

Over the next decade, we forecast systemwide sales to grow 5.3% annually, driven by 3.3% unit growth and 3.2% comparable sales growth. Our expectation is propelled by outsize unit expansion in the international developmental segment, where we forecast 8.8% system sales growth, supported by 5.8% unit growth as McDonald’s master franchisees build out underpenetrated markets, particularly in Asia (including China, India, and Indonesia). By contrast, we anticipate more moderate system sales growth of 4% and 5.3% in the mature US and international operated markets, respectively, with a greater contribution from comparable sales (3.1% and 4.5% annually in the US and IOM, respectfully) and modestly higher IOM unit growth (1.1% versus roughly 0.3% in the US). We surmise unit growth in these segments will come from expansion outside the firm’s urban core markets, while targeting communities where populations have risen. In support of our comparable sales growth assumptions, we posit McDonald’s will continue to resonate with consumers through persistent menu development, marketing and promotion, and improved convenience and engagement through digital channels and loyalty, enabling the firm to drive traffic and raise prices to more than offset input and labor inflation.

We also forecast McDonald’s consolidated operating margin to expand to nearly 58% in 2035 from 46.1% in 2025, supported by a growing mix of higher-margin franchise revenue (rising to 77% of total revenue by 2035 from 62% in 2025), where the firm collects royalties without bearing the cost of restaurant expenses, requiring less in the way of selling, general, and administrative expenses, which we see falling to 1.7% of total system sales in 2035 from 12.2% in 2025. Additionally, we expect restaurant margins to rise to 19.5% from 14.7% in 2025, returning to prepandemic levels by 2029 as promotions normalize, input cost inflation remains moderate, and stronger comparable sales improve fixed cost leverage. We also see restaurant-level profitability benefiting from technology initiatives, which should enhance store-level operational efficiency over time. This is further aided by the refranchising of weaker company-owned units.

We assign McDonald’s a wide moat rating, underpinned by its strong intangible assets and cost advantage. McDonald’s leads in brand recognition, leading the global foodservice industry with over $139 billion in systemwide sales and a 4.2% share, twice that of Yum Brands (2%) and around 3 times Restaurant Brands (1.4%), who are both multi-brand operators, in an highly competitive landscape with low barriers to entry and minimal switching costs. We believe McDonald’s strong brand is corroborated by pricing power, attractive unit economics, and successful international replication. Meanwhile, we suspect that the operator captures procurement benefits and leverages its scale to spread technology and marketing investments across its sales base. As such, McDonald’s has chalked up returns on invested capital, including goodwill, of 22%, outpacing our 7% weighted average cost of capital over the past decade. We surmise the firm should continue to outearn its cost of capital over a 20-year horizon, supporting our wide moat rating.

Digging deeper, we suspect McDonald’s has pricing power backed by its strong brand, as evidenced by comparable sales growth (up 4.4% on average over the past decade, comfortably ahead of our estimate of 3.9% aggregate annual inflation in food and labor costs). We think these price hikes have been facilitated by on-trend menu innovations that haven’t come at the expense of convenience or perceived value. The firm has achieved this through the evolution of its 17 individual billion-dollar menu items (65% of sales), such as the Big Mac and Chicken McNuggets, which command higher price points supported by quality enhancements and flavor extensions. The burger-focused firm has evolved with consumers by expanding its lineup of chicken fare, which generated 2023 sales commensurate with beef at about $25 billion, according to management.

McDonald’s ability to drive comparable sales growth supports strong unit economics, which we expect to continue to attract franchisees and aid in its goal of nearing 50,000 restaurants by 2027, up from around 45,000 globally in 2025. We point to higher average unit volumes (AUVs) of around $4 million, compared to Wendy’s ($2 million), Burger King ($1.6 million), and Sonic ($1.6 million), which allow McDonald’s to spread unit-level costs more effectively. Aided by a larger sales base, we estimate that McDonald’s franchisees chalk up roughly 20% cash-on-cash returns, exceeding the mid-single- to mid-double-digit range we estimate for the aforementioned peers.

McDonald’s broad international footprint illustrates that the strength of its brand transcends borders by adapting to local tastes and preferences, propelling 6% annualized comparable international sales growth over the last seven years. The firm leads the pack globally with over 31,500 international stores (up from 25,500 in 2020), surpassing KFC (30,500) and Starbucks (23,000). According to Euromonitor, McDonald’s ranks number one in brand market share in Australasia (17.9% share), Eastern Europe (18.5%), Western Europe (17.4%), Latin America (6.5%), and Asia-Pacific (6.3%), while narrowly trailing KFC’s 8.7% share in the Middle East and Africa with a 6.2% share.

We contend McDonald’s competitive edge extends beyond its brand clout to a cost advantage. With nearly $139 billion in systemwide sales, well ahead of Yum Brands ($68 billion) and Restaurant Brands ($46 billion), the firm wields bargaining power over suppliers and benefits from scale in advertising and technology. McDonald’s directs more than $50 billion annually toward purchases of food, packaging, and services, which translates into volume discounts and favorable pricing from suppliers. Its vast footprint and high AUVs generate larger case volumes per unit, lowering last-mile delivery costs per store. Superior procurement enables the firm to deliver greater value to customers and franchisees, while maintaining greater pricing flexibility even when operating conditions sour.

Further, we believe McDonald’s maximizes its marketing returns by spreading the cost across its sales base. While McDonald’s doesn’t disclose a total advertising figure inclusive of franchisee contributions, applying a 4% marketing royalty (the baseline rate in the US) to $55 billion in US sales implies roughly $2.2 billion at the firm’s disposal in just its domestic market, besting second largest, Yum Brands, $1.8 billion. These bulk advertisement purchases should yield discounts, while global campaigns, such as the Olympics, stand to generate higher returns.

Lastly, McDonald’s ability to deploy large-scale technology initiatives across its network reinforces its cost edge. The firm equipped stores with demand-forecasting technology, while geofencing technology monitors customer arrivals, which reduces wait times by 50%. In some of its largest markets, AI-powered scales are used to verify the accuracy of delivery orders, bolstering the brand's reputation on third-party apps. In China, RGM Boss is an AI-enabled business operating system that saves management teams two hours per day and has delivered a 30-basis-point improvement in restaurant margins by automating administrative tasks. Most notably, we highlight the prowess of McDonald’s loyalty platform, which boasts 46 million US 90-day active members, surpassing Starbucks (36 million) and Chipotle (21 million 12-month active members). This enables the firm the power to reap insights, personalize offers, and drive traffic at scale. The firm expects to top the 250-million-member mark globally in 2027 from 210 million at the end of 2025, propelled by the flywheel of its in-store digital investments and geographic membership expansion. Ultimately, we believe McDonald’s investments generate higher returns than those of smaller peers while serving as a critical engine to improve customer experience through convenience and value.

McDonald’s is well-positioned to capture market share, despite the intensely competitive backdrop, thanks to its capacity to fuel menu innovation and ability to invest in traffic-driving promotions and menu innovation.

Efforts to reduce tech fragmentation, modernize stores, and centralize data—combined with ongoing investments in automation, AI, and geofencing—should lead to a consistent customer experience while bolstering efficiency.

Expanding global active loyalty memberships to 250 million by 2027 from 210 million in 2025 should help bolster personalization and lift frequency.

Rising beef costs and further minimum wage hikes could strain franchisees, limiting their appetite to deepen promotion in a weaker macroenvironment and possibly curtailing development prospects.

International competition is intensifying as scaled rivals expand abroad. This could limit long-term comparable sales prospects or unit growth.

Evolving consumer health trends, including the rise in GLP-1 use, may steer traffic toward healthier concepts, disrupting McDonald’s long-term growth prospects.