Why another iteration of McValue, how often will it change, and what makes some international markets more successful on value than others (e.g., France)?

McValue needs both Meal Deals and Everyday Affordable Price (EDAP) items (under $3) to cater to different consumer needs. The U.S. now has both, similar to most international markets. France was an exception, lacking a strong program, which is now being addressed. Overall value and affordability scores have significantly improved for McDonald's. Agility and discipline in value execution are key. “You need to have a Meal Deal offering there to be able to drive interest and excitement around some of our core menu items. But you also need entry-level price points for those folks, who are maybe a little bit more stressed around affordability and are looking for what can I get for $3 or less.”

Given U.S. and IOM company store margin pressures, is there an opportunity to refranchise, and should development targets be rethought?

U.S. company-operated performance is "not acceptable," but IOM company-operated margins grew despite higher inflation. Decisions to own or refranchise are based on generating strong returns and system outcomes. The company is re-evaluating the development pipeline due to new construction costs and supply chain challenges, prioritizing returns over absolute growth numbers. They remain confident in reaching 50,000 restaurants by end of 2027. “our U.S. McOpCo performance is not acceptable.”

Update on U.S. franchisee profitability trends and IOM franchisee profitability given energy price spikes.

Franchisee profitability is under pressure due to inflation (e.g., beef inflation, particularly in Europe and U.S.). U.S. cash flow was stable last year, but concerns exist for this year. IOM franchisees also feel pressure. McDonald's is working with franchisees to navigate cost pressures and grow cash flow. Commodity inflation for 2026 is expected to be low to mid-single digits in U.S. and mid-single digits in IOM, with hedging in place. “beef inflation is just one example, particularly pronounced in Europe, but also a factor in the U.S. For a portfolio like ours, that absolutely puts pressure on this.”

MCD

MCDONALDS (MCD) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· May 7, 2026

Source: earnings call transcript

Executive summary

McDonald's Q1 FY26 — Value-Driven Growth Amid Macro Headwinds

McDonald's delivered solid Q1 FY26 results, driven by strong global comparable sales and market share gains, underpinned by its value, marketing, and menu innovation strategies. Despite this, the company anticipates a meaningful deceleration in Q2 comp sales across segments due to challenging prior-year comparisons and ongoing macroeconomic pressures, particularly affecting lower-income consumers. Management is addressing U.S. company-operated margin issues and re-evaluating development plans to ensure strong returns.

Highlights

Global system-wide sales grew 6% in constant currency.
Global comparable sales grew 3.8% with solid growth across all operating segments.
Gained market share in nearly all of its top 10 markets.
U.S. comparable sales grew 3.9%, delivering positive comparable sales and guest count gaps to near-end competitors.
Adjusted EPS reached $2.83, including a $0.13 benefit from foreign currency translation, representing a 1% increase on a constant currency basis.

Concerns

U.S. company-operated margins were deemed "not acceptable" due to increased labor investment and restrained pricing.
Expected a "meaningful deceleration" in Q2 comp sales for U.S. and IOM segments due to difficult April comparisons (Minecraft lap).
Expected Q2 IDL comp sales growth to decelerate from 3.4% in Q1, primarily due to volatility in the Middle East and some Asian markets.
Lower-income consumer spending is still declining, with pressures expected to continue due to elevated gas prices.

Guidance & targets

Category	Target	Timeline	Confidence
Full year 2026 financial targets	Reaffirmed high materiality	FY26 · 2026	High
Full year 2026 EPS foreign currency tailwind	$0.20 to $0.30 medium materiality	FY26 · 2026	Medium
Total restaurants	Approximately 50,000 restaurants high materiality	End of 2027	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Global Solid growth across each of our operating segments. System-wide sales growth constant currency: 6%	—	6%	—	—
Global Solid growth across each of our operating segments. Comparable sales growth: 3.8%	—	3.8%	—	—
U.S. Continued to build on momentum from late 2025. Comparable sales growth: 3.9%Positive comparable guest count gaps to near-end competitorsMaintained market share	—	3.9%	—	—
International Operated Markets (IOM) Driven primarily by strong performance in the U.K., Germany, and Australia, which delivered mid- to high single-digit comp growth. Comparable sales growth: 3.9%Gained share in nearly all top international markets	—	3.9%	—	McOpCo margin growth
International Developmental Licensed Markets (IDL) Led by continued strength in Japan. Maintained share in China despite macroeconomic pressures. Comparable sales growth: 3.4%	—	3.4%	—	—

Product announcements

Product	Type	Timeline	Details
U.S. McCafe beverage platform	launch	Launched May 6, 2026
Germany and Canada beverage platforms	launch	Launched a few days prior to May 7, 2026

Deals & partnerships

FIFA partnership 30-year-plus association

Sponsorship of the World Cup, continuing this year. World Cup in North America (U.S., Canada, Mexico) this year.

Netflix (KPop Demon Hunters) partnership

Campaign built for digitally native customers, combining dual-daypart offerings with digital activation in the McDonald's app.

The Super Mario Galaxy Movie partnership

Happy Meal tied to the film's release.

Friends (TV show theme) partnership

Connected with long-time fans across several international markets by tapping into nostalgia and collectibles. Also featured in Italy.

Risks & headwinds

Challenging macro environment and consumer sentiment Ongoing

Not improving, and it may be getting a little bit worse.

Mitigation:Focus on controllable factors: value, marketing, menu innovation.

Volatile operating environment in the Middle East Ongoing

Direct impact on our operations in that region did not have a material impact on our total company results in the first quarter.

Mitigation:Teams focused on supporting franchisees, mitigating costs, protecting long-term health of business.

Increased risk of higher cost inflation due to ongoing global supply chain disruptions End of 2026 into beginning of 2027

More potentially inflation on the way as we get to the end of '26 and into beginning of '27.

Mitigation:Strong top line growth, managing cost impact, hedging strategies.

Elevated gas prices disproportionately impacting low-income consumers Ongoing

Low income is absolutely still declining.

Mitigation:Value program (McValue) to recapture low-income consumers.

Franchisee profitability pressure due to inflation (e.g., beef inflation) Current

U.S. franchisees right now, they're feeling under pressure from a cash flow standpoint. I think you'd find the same thing if you talk to our IOM franchisees.

Mitigation:Working with franchisees to navigate cost pressures and grow cash flow.

Rising construction costs and supply chain challenges impacting new restaurant development Current, impacting future development

If that means that some of those restaurant locations that are in our pipeline no longer make sense, they'll drop out.

Mitigation:Re-evaluating pipeline, prioritizing good returns over absolute growth numbers.

Q&A highlights

How does McDonald's view the U.S. sales trajectory for the rest of 2026, considering key drivers and the challenging macro environment?

Management feels good about the U.S. marketing calendar, expecting benefits from the McValue program and new beverage platforms. They acknowledge the macro environment is not improving and may be worsening, but focus on controllable factors. Q2 is expected to see a "meaningful deceleration" in comp sales for U.S. and IOM due to the difficult April comp (Minecraft lap), and IDL will also decelerate due to Middle East/Asia volatility. However, they expect a 2-year stack acceleration for each segment.

“I think we expected April to be a difficult comp month, driven by the really successful global Minecraft program... comp sales in both -- comp sales in both the IOM and the U.S. segment were slightly negative in April.”

asked by Dennis Geiger · answered by Christopher Kempczinski, Ian Borden

2 min read 6 chapters

Detailed narrative

Value Leadership and McValue Platform

McDonald's emphasizes its DNA of value and affordability, adjusting offerings to meet customer needs. The U.S. relaunched McValue to include an everyday affordable price menu with individual items under $3 and a $4 breakfast meal deal, building on existing meal deals.

This strategy, informed by international markets, aims to grow share with low-income consumers and improve value scores, which has been successful since the program's September launch.

Marketing and Menu Innovation

The company leverages culturally relevant marketing campaigns, such as the Friends campaign and partnerships with Super Mario Galaxy Movie and KPop Demon Hunters, to drive traffic and strengthen brand momentum. Menu innovation, particularly in beverages, is a key focus, with new platforms launched in Germany, Canada, and the U.S. (McCafe refreshers and crafted sodas), with Red Bull-infused energy drinks planned for later in the year.

International Market Performance and Challenges

While many international markets, including the U.K., Germany, and Australia, demonstrated strong comparable sales growth and market share gains through disciplined execution of value, menu, and marketing, France was highlighted as an underperforming market. France is now implementing a new value platform to improve performance in a contracting industry environment, reflecting a shared commitment to improving performance.

U.S. Company-Operated Margin Issues

U.S. company-operated restaurant margins were deemed "not acceptable" due to increased labor investments combined with overly restrained pricing actions. Management is actively addressing these issues and re-evaluating the optimal franchisee versus company ownership balance to maximize system value. This could potentially lead to refranchising opportunities if company-operated restaurants cannot deliver strong returns.

Development and Capital Allocation

McDonald's remains confident in its long-term development target of approximately 50,000 restaurants by the end of 2027. However, new restaurant development and remodel cycles are being re-evaluated in light of rising construction costs and supply chain challenges, with a focus on ensuring strong returns for both the company and franchisees. The system possesses significant financial firepower for strategic investments when good opportunities arise.

Consumer Income-Cohort Trends

Higher-income consumers continue to show resilient spending, contributing to solid growth and market share gains for McDonald's. Conversely, lower-income consumer spending is still declining, though less pronounced than previously, exacerbated by elevated gas prices. These pressures are expected to persist, and McDonald's aims to appeal to all income cohorts through its compelling value and affordability offerings.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.