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    MCD
    Earnings call· Mar 2026(Q1 FY26)

    MCDONALDS Q1 FY26 earnings call MCD

    May 7, 2026 Source

    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

    5

    • 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

    4

    • 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

    3
    CategoryTargetConfidence
    Full year 2026 financial targets
    Reaffirmed
    high materiality
    High
    Full year 2026 EPS foreign currency tailwind
    $0.20 to $0.30
    medium materiality
    Medium
    Total restaurants
    Approximately 50,000 restaurants
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    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%——

    Operational metrics

    11
    Adjusted EPS
    $2.83
    Q1 FY26

    Includes a benefit from foreign currency translation.

    Adjusted EPS growth constant currency
    1%YoY
    Q1 FY26

    Versus prior year.

    Adjusted operating margin
    46%
    Q1 FY26

    Highlights resiliency of business model.

    Restaurant margins
    $3.6B
    Q1 FY26

    Generated during the quarter.

    McValue program financial support to franchisees
    Below $35MBelow initial estimate
    Q1 FY26

    For the EVM relaunch program, concluded at end of March.

    New restaurant openings in China
    ~1,000
    FY26

    Remains on track despite macroeconomic pressures.

    Food and paper inflation (U.S.)
    Low to mid-single-digit
    FY26

    Expected for the full year.

    Food and paper inflation (IOM)
    Mid-single digits
    FY26

    Expected for the full year.

    Chicken market share gain
    ~2 points
    Last few years

    Gained significant share over the last few years.

    Beef market share
    Mid-40%
    Current

    Global share.

    Chicken market share
    High teens
    Current

    Global share, significant headroom for growth compared to beef.

    Industry KPIs

    6
    MetricValueDetails
    Comparable sales comps3.8%%
    Global system wide sales6%%
    Franchisee financial healthUnder pressure
    Input cost inflation hedgingLow to mid-single-digit%
    Value affordability positioningStrong
    Net unit growth development pipeline~1,000units

    Product announcements

    2
    ProductTypeDetails
    U.S. McCafe beverage platformlaunch
    Germany and Canada beverage platformslaunch

    Deals & partnerships

    4
    FIFApartnership30-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 Moviepartnership

    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

    6
    Challenging macro environment and consumer sentimentOngoing

    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 EastOngoing

    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 disruptionsEnd 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 consumersOngoing

    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 developmentCurrent, 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

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.