What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-05 · 118 added, 236 removed, 486 unchanged (42% of the section changed)

5 unchanged sentences

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 44,599 McDonald's restaurants at September 30, 2025, approximately 95% were franchised.

Of the 45,699 McDonald's restaurants at March 31, 2026, 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, there is the International Developmental Licensed Markets & Corporate, which includes the results of over 75 countries, as well as Corporate activities.

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.

4 unchanged sentences

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 while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants.

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.

43 unchanged sentences

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 plans to offer the McCrispy sandwich in nearly all major markets by the end of 2025 and to extend the McCrispy brand into strips and wraps in several markets.

These planned innovations and new menu offerings reflect the Company's ability to meet evolving customer preferences.

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.

6 unchanged sentences

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 plans to deploy this initiative in its top six markets by the end of 2025.

The Company has successful loyalty programs in 60 markets, including its top six markets.

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.

The Company offers delivery from approximately 40,000 restaurants across approximately 100 markets, representing nearly 90% of McDonald's restaurants.

The Company offers delivery from over 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).

2 unchanged sentences

◦ Drive Thru:

The Company has the most drive thru locations worldwide, with nearly 29,000 drive thru locations globally, including over 95% of the over 13,500 locations in the U.S.

The Company has the most drive thru locations worldwide, with over 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.

4 unchanged sentences

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 2025, the Company plans to open about 2,200 new restaurants (gross) across the globe, which will contribute to slightly over 4% new unit growth (net of closures).

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.

11 unchanged sentences

The Company is building a modern company platform, through our 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.

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.

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.

Third Quarter and Nine Months 2025 Financial Performance

Global comparable sales increased 3.6% for the quarter and 2.2% for the nine months.

comparable sales increased 2.4% for the quarter and 0.5% for the nine months.

Comparable sales results for both periods were primarily driven by positive check growth.

• International Operated Markets comparable sales increased 4.3% for the quarter and 2.6% for the nine months.

All markets reflected positive comparable sales for the quarter, led by Germany and Australia.

Results for the nine months were driven by positive comparable sales in nearly all markets.

• International Developmental Licensed Markets comparable sales increased 4.7% for the quarter and 4.6% for the nine months.

Positive comparable sales for both periods were led by Japan, with all geographic regions reflecting positive comparable sales.

In addition to the comparable sales results, the Company had the following financial results for the quarter and nine months:

• Consolidated revenues increased 3% (1% in constant currencies) for the quarter and 2% (1% in constant currencies) for the nine months.

• Systemwide sales increased 8% (6% in constant currencies) for the quarter and 5% (5% in constant currencies) for the nine months.

• Consolidated operating income increased 5% (3% in constant currencies) for the quarter and 4% (3% in constant currencies) for the nine months.

Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 30 of this report, consolidated operating income increased 3% (1% in constant currencies) for the quarter and 3% (2% in constant currencies) for the nine months.

• Diluted earnings per share was $ 3.18 for the quarter, an increase of 2% (flat in constant currencies) and $ 8.92 for the nine months, an increase of 4% (3% in constant currencies).

Excluding current and prior year charges detailed in the Net Income and Diluted Earnings Per Share section on page 24 of this report, diluted earnings per share for the quarter was flat at $3.22 (a decrease of 1% in constant currencies) and $9.08, an increase of 2% (1% in constant currencies) for the nine months.

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.

First Quarter 2026 Financial Performance

Global comparable sales increased 3.8%.

increased 3.9%.

Comparable sales results were primarily driven by positive check growth.

• International Operated Markets increased 3.9%.

Nearly all markets reflected positive comparable sales, led by the U.K., Germany and Australia.

• International Developmental Licensed Markets increased 3.4%.

Positive comparable sales were led by Japan, with all geographic regions reflecting comparable sales growth.

In addition to the comparable sales results, the Company had the following financial results:

• Consolidated revenues increased 9% (4% in constant currencies).

• Systemwide sales increased 11% (6% in constant currencies).

• Consolidated operating income increased 12% (6% in constant currencies).

Results reflected pre-tax charges of $47 million and $66 million for the current year and prior year, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Excluding these current and prior year charges, consolidated operating income increased 11% (5% in constant currencies).

• Diluted earnings per share was $ 2.78 , an increase of 7% (2% in constant currencies).

Excluding the current year charges described above of $0.05 per share, diluted earnings per share was $2.83, an increase of 6% (1% in constant currencies) when also excluding prior year charges.

Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic 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.

16 unchanged sentences

Dollars in millions, except per share data

Quarters Ended September 30, 2025 2024 Inc/(Dec)

Quarters Ended March 31, 2026 2025 Inc/(Dec)

Revenues from franchised restaurants $ 4,007 $ 3,661 9 %

19 unchanged sentences

Earnings per common share-diluted $ 2.78 $ 2.60 7 %

Nine Months Ended September 30, 2025 2024 Inc/(Dec)

Revenues from franchised restaurants $ 12,238 $ 11,756 4 %

Sales by Company-owned and operated restaurants 7,154 7,472 (4)

Other revenues 485 304 60

Total revenues 19,876 19,532 2

Operating costs and expenses

Franchised restaurants-occupancy expenses 1,940 1,902 2

Company-owned and operated restaurant expenses 6,109 6,358 (4)

Other restaurant expenses 424 241 76

Selling, general & administrative expenses

Depreciation and amortization 333 311 7

Other 1,834 1,748 5

Other operating (income) expense, net ( 1 ) 129 n/m

Total operating costs and expenses 10,639 10,688 —

Operating income 9,237 8,844 4

Interest expense 1,172 1,126 4

Nonoperating (income) expense, net ( 75 ) ( 90 ) (16)

Income before provision for income taxes 8,140 7,807 4

Provision for income taxes 1,740 1,600 9

Net income $ 6,399 $ 6,207 3 %

Earnings per common share-basic $ 8.96 $ 8.63 4 %

Earnings per common share-diluted $ 8.92 $ 8.59 4 %

n/m Not meaningful

Impact of the War in the Middle East

The Company’s Systemwide sales and revenue have continued to be negatively impacted by the war in the Middle East, primarily in the International Developmental Licensed Markets, where the majority of restaurants are under a developmental license or affiliate arrangement.

The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue until macroeconomic conditions recover.

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.

Impact of Foreign Currency Translation

The impact of foreign currency translation on consolidated operating results for both periods 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.

The impact of foreign currency translation on consolidated operating results for the quarter primarily reflected the strengthening of most major currencies against the U.S.

Dollar, primarily driven by the Euro.

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.

3 unchanged sentences

Benefit/ (Cost)

Quarters Ended September 30, 2025 2024 2025

Revenues $ 7,078 $ 6,873 $ 151

Franchised margins 3,697 3,447 74

Company-owned and operated margins 391 407 10

Selling, general & administrative expenses 785 647 (6)

Operating income 3,357 3,188 78

Net income 2,278 2,255 31

Earnings per share-diluted $ 3.18 $ 3.13 $ 0.04

Benefit/ (Cost)

Nine Months Ended September 30, 2025 2024 2025

Quarters Ended March 31, 2026 2025 2026

Revenues $ 6,517 $ 5,956 $ 313

6 unchanged sentences

Net Income and Diluted Earnings per Share

For the quarter, net income increased 1% (flat in constant currencies) to $ 2,278 million, and diluted earnings per share increased 2% (flat in constant currencies) to $ 3.18 .

Foreign currency translation had a positive impact of $0.04 on diluted earnings per share.

For the nine months, net income increased 3% (2% in constant currencies) to $ 6,399 million, and diluted earnings per share increased 4% (3% in constant currencies) to $ 8.92 .

Net income increased 6% (1% in constant currencies) to $ 1,983 million, and diluted earnings per share increased 7% (2% in constant currencies) to $ 2.78 .

Foreign currency translation had a positive impact of $0.13 on diluted earnings per share.

Results for 2025 included the following:

• Net pre-tax charges of $39 million, or $0.04 per share, for the quarter and $148 million, or $0.16 per share, for the nine months, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working ( Accelerating the Organization)

Results for 2024 included the following:

• Net pre-tax charges of $52 million, or $0.05 per share, for the quarter and $142 million, or $0.15 per share, for the nine months, primarily consisted of transaction costs 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

• Pre-tax charges of $46 million, or $0.05 per share, for the quarter and $146 million, or $0.15 per share, for the nine months, related to restructuring charges associated with Accelerating the Organization

Excluding the above items, operating income growth for both periods was primarily driven by higher sales-driven Franchised margins, partly offset by higher Selling, general, and administrative expenses.

During the quarter, the Company paid a dividend of $1.77 per share, or $1,262 million, resulting in total dividends paid for the nine months of $3,792 million.

Additionally, during the quarter, the Company repurchased 1.7 million shares of stock for $503 million, resulting in total purchases for the nine months of 4.8 million shares, or $1,456 million.

Results included pre-tax charges of $47 million, or $0.05 per share, for the three months ended March 31, 2026 and $66 million, or $0.07 per share, for the three months ended March 31, 2025, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working ( Accelerating the Organization).

Excluding the above items, results reflected higher sales-driven Franchised margins, partly offset by a higher effective tax rate.

During the quarter, the Company paid a quarterly dividend of $1.86 per share, or $1.3 billion.

Additionally, the Company repurchased 1.3 million shares of stock for $393 million.

NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION

Dollars in millions, except per share data

Quarters Ended September 30,

Net Income Earnings per share - diluted

2025 2024 Inc/ (Dec) Inc/ (Dec)

Translation 2025 2024 Inc/ (Dec) Inc/ (Dec)

GAAP $ 2,278 $ 2,255 1 % — % $ 3.18 $ 3.13 2 % — %

(Gains)/Charges 30 67 0.04 0.10

Non-GAAP $ 2,308 $ 2,322 (1) % (2) % $ 3.22 $ 3.23 — % (1) %

Nine Months Ended September 30,

Quarters Ended March 31,

Net Income Earnings per share - diluted

2 unchanged sentences

GAAP $ 1,983 $ 1,868 6 % 1 % $ 2.78 $ 2.60 7 % 2 %

(Gains)/Charges 114 218 0.16 0.30

(Gains)/Charges, net of tax 36 51 0.05 0.07

Non-GAAP $ 2,019 $ 1,919 5 % — % $ 2.83 $ 2.67 6 % 1 %

3 unchanged sentences

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 September 30, 2025 .

Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at March 31, 2026.

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.

Dollars in millions

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended March 31, 2026 2025 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

6 unchanged sentences

International Operated Markets 1,477 1,309 13 4

International Developmental Licensed Markets & Corporate 128 349 (63) n/m

Total $ 2,563 $ 2,656 (3) % (6) %

Total Franchised revenues and Company-owned and operated sales

$ 2,696 $ 2,673 1 % 1 %

International Operated Markets 3,606 3,266 10 6

International Developmental Licensed Markets & Corporate 111 99 12 (3)

Total $ 2,317 $ 2,132 9 % 3 %

Total Other revenues $ 151 $ 124 22 % 22 %

Total Revenues $ 7,078 $ 6,873 3 % 1 %

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

$ 5,485 $ 5,417 1 % 1 %

International Operated Markets 5,354 5,039 6 4

International Developmental Licensed Markets & Corporate 1,398 1,300 8 8

Total $ 12,238 $ 11,756 4 % 3 %

Company-owned and operated sales

$ 2,306 $ 2,417 (5) % (5) %

International Operated Markets 4,518 4,278 6 5

International Developmental Licensed Markets & Corporate 330 777 (57) n/m

Total $ 7,154 $ 7,472 (4) % (5) %

Total Franchised revenues and Company-owned and operated sales

5 unchanged sentences

Total Revenues $ 6,517 $ 5,956 9 % 4 %

n/m Not meaningful

• Total Franchised revenues and Company-owned and operated sales increased 3% (flat in constant currencies) for the quarter and increased 1% (flat in constant currencies) for the nine months.

Both periods benefited from positive sales performance in the International Operated Markets.

In the U.S., total revenues for the quarter was driven by positive franchised sales performance, while the nine months was driven by negative Company-owned and operated sales performance.

International Developmental Licensed Markets & Corporate revenues for both periods were impacted by the prior year sale of McDonald's business in South Korea, partly offset by positive sales performance.

International Developmental Licensed Markets & Corporate revenues for the nine months also reflected the prior year acquisition of McDonald's business in Israel.

• Total Franchised revenues and Company-owned and operated sales increased 9% (4% in constant currencies), benefiting from strong sales performance across all segments and the positive impact of foreign currency translation in the International Operated Markets and the International Developmental Licensed Markets.

Comparable Sales

The following table presents the percent change in comparable sales for the quarters and nine months ended September 30, 2025 and 2024:

The following table presents the percent change in comparable sales for the three months ended March 31, 2026 and 2025:

Increase/(Decrease)

Quarters Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Quarters Ended March 31,

3.9 % (3.6) %

1 unchanged sentence

International Developmental Licensed Markets 3.4 3.5

Total Company 3.6 % (1.5) % 2.2 % (0.2) %

Total 3.8 % (1.0) %

Systemwide Sales and Franchised Sales

The following table presents the percent change in Systemwide sales for the quarter and nine months ended September 30, 2025:

The following table presents the percent change in Systemwide sales for the three months ended March 31, 2026:

SYSTEMWIDE SALES*

Quarter Ended September 30, 2025 Nine Months Ended September 30, 2025

Quarter Ended March 31, 2026

Inc/ (Dec) Inc/ (Dec)

Translation Inc/ (Dec) Inc/ (Dec)

3 % 3 % 1 % 1 %

International Operated Markets 16 6

International Developmental Licensed Markets 12 8

Total Company 8 % 6 % 5 % 5 %

Total 11 % 6 %

*Unlike comparable sales, the Company has not excluded sales from hyperinflationary markets from Systemwide sales as these sales are the basis on which the Company calculates and records revenues.

Franchised sales are not recorded as revenues by the Company, but are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

The following table presents Franchised sales and the related increases/(decreases) for the quarters and nine months ended September 30, 2025 and 2024:

The following table presents franchised sales and the related increases/(decreases) for the three months ended March 31, 2026 and 2025:

FRANCHISED SALES

Dollars in millions

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 13,376 $ 12,893 4 % 4 %

International Operated Markets 11,439 10,334 11 6

International Developmental Licensed Markets 9,279 8,106 14 13

Total $ 34,093 $ 31,333 9 % 7 %

Ownership type

Conventional franchised $ 24,635 $ 23,088 7 % 5 %

Developmental licensed 5,885 5,005 18 16

Foreign affiliated 3,573 3,240 10 8

Total $ 34,093 $ 31,333 9 % 7 %

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended March 31, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 12,388 $ 11,771 5 % 5 %

15 unchanged sentences

Inc/ (Dec) Inc/ (Dec)

Quarters Ended September 30, 2025 2024

$ 1,581 $ 1,525 4 % 4 %

International Operated Markets 1,620 1,463 11 6

International Developmental Licensed Markets & Corporate 496 459 8 6

Total $ 3,697 $ 3,447 7 % 5 %

Company-owned and operated

$ 90 $ 105 (15) % (15) %

International Operated Markets 288 258 11 8

International Developmental Licensed Markets & Corporate n/m n/m n/m n/m

Total $ 391 $ 407 (4) % (6) %

Total restaurant margins

$ 1,671 $ 1,631 2 % 2 %

International Operated Markets 1,908 1,722 11 6

International Developmental Licensed Markets & Corporate n/m n/m n/m n/m

Total $ 4,088 $ 3,855 6 % 4 %

Inc/ (Dec) Inc/ (Dec)

Nine Months Ended September 30, 2025 2024

Quarters Ended March 31, 2026 2025

$ 1,427 $ 1,360 5 % 5 %

13 unchanged sentences

n/m Not meaningful

• Franchised margins in the U.S., International Operated Markets and the International Developmental Licensed Markets & Corporate reflected sales-driven growth for both periods.

Franchised margins represented approximately 90% of restaurant margin dollars.

• Company-owned and operated margins for both periods reflected the impact of ongoing inflationary cost pressures in the U.S.

and the International Operated Markets.

was impacted by negative sales performance, while the International Operated Markets reflected sales-driven growth.

• Total restaurant margins included depreciation and amortization expense of $438 million and $420 million for the quarters ended 2025 and 2024, respectively, and $1.3 billion and $1.2 billion for the nine months ended 2025 and 2024, respectively.

• Franchised margins reflected sales-driven growth across all segments and the positive impact of foreign currency translation in the International Operated Markets and the International Developmental Licensed Markets.

Franchised margins represented more than 90% of restaurant margin dollars.

• Company-owned and operated margins in the U.S.

primarily reflected the impact of ongoing inflationary cost pressures, partly offset by sales-driven growth.

The International Operated Markets primarily reflected sales-driven growth and the positive impact of foreign currency translation, partly offset by the impact of ongoing inflationary cost pressures.

• Total restaurant margins included depreciation and amortization expense of $455 million and $413 million for the three months ended March 31, 2026 and 2025, respectively.

Selling, General & Administrative Expenses

• Selling, general and administrative expenses increased $137 million or 21% (20% in constant currencies) for the quarter and increased $109 million or 5% (5% in constant currencies) for the nine months.

Results for the quarter primarily reflected increased spend on marketing initiatives, higher incentive-based compensation and investments in digital and technology, as well as transformation efforts, under our Accelerating the Arches strategy.

Results for the nine months primarily reflected higher employee costs, including incentive-based compensation.

• Selling, general and administrative expenses as a percent of Systemwide sales were 2.1% for both the nine months ended September 30, 2025 and 2024, respectively.

• Selling, general and administrative expenses increased $77 million or 11% (9% in constant currencies) primarily reflecting higher employee costs, including incentive-based compensation.

• Selling, general and administrative expenses as a percent of Systemwide sales were 2.2% for both the three months ended March 31, 2026 and 2025.

Other Operating (Income) Expense, Net

1 unchanged sentence

Dollars in millions

Quarters Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Quarters Ended

Gains on sales of restaurant businesses $ (30) $ (8)

3 unchanged sentences

Total $ ( 69 ) $ 7

• Gains on sales of restaurant businesses increased for both periods primarily due to more sales of restaurants in the International Operated Markets and the U.S.

• Equity in earnings of unconsolidated affiliates for both periods primarily reflected higher equity in earnings in China and Japan as a result of improved operating performance.

• The increase in asset dispositions and other (income) expense, net for both periods primarily reflected higher asset write-offs and higher store closing costs.

• Impairment and other charges (gains), net reflected net pre-tax charges of $39 million and $148 million for the quarter and the nine months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and nine months ended 2024 reflected net pre-tax charges of $52 million and $142 million, respectively, primarily consisting of transaction costs 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, and pre-tax charges of $46 million and $146 million for the quarter and nine months, respectively, related to restructuring charges associated with Accelerating the Organization .

• The increase in gains on sale of restaurant businesses reflected more sales of restaurants in the International Operated Markets.

• The change in asset dispositions and other (income) expense, net primarily reflected higher gains on sale of excess properties.

• Impairment and other charges (gains), net reflected pre-tax charges of $47 million and $66 million for the three months ended March 31, 2026 and 2025, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Operating Income

1 unchanged sentence

Dollars in millions

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended March 31, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 1,380 $ 1,302 6 % 6 %

2 unchanged sentences

Total $ 2,953 $ 2,648 12 % 6 %

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 4,327 $ 4,400 (2) % (2) %

International Operated Markets 4,686 4,459 5 3

International Developmental Licensed Markets & Corporate 224 ( 15 ) n/m n/m

Total $ 9,237 $ 8,844 4 % 3 %

Operating margin 45.3 % 44.5 %

n/m Not meaningful

• Operating income increased $168 million, or 5% (3% in constant currencies), for the quarter and increased $393 million, or 4% (3% in constant currencies), for the nine months.

Results reflected net pre-tax charges of $39 million and $148 million for the quarter and the nine months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and nine months ended 2024 reflected net pre-tax charges of $52 million and $142 million, respectively, primarily related to non-cash impairment charges and transaction costs, and pre-tax restructuring charges of $46 million and $146 million for the quarter and nine months, respectively, related to Accelerating the Organization .

• Operating income increased $305 million or 12% (6% in constant currencies).

Results reflected pre-tax charges of $47 million and $66 million for the three months ended March 31, 2026 and 2025, respectively, primarily related to restructuring charges associated with Accelerating the Organization .

OPERATING INCOME & OPERATING MARGIN RECONCILIATION*

Dollars in millions

Quarters Ended September 30, Nine Months Ended September 30,

2025 2024 Inc/ (Dec) Inc/ (Dec)

Translation 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended March 31, 2026 2025 Inc/ (Dec) Inc/ (Dec)

GAAP operating income $ 2,953 $ 2,648 12 % 6 %

2 unchanged sentences

Non-GAAP operating margin 46.0 % 45.6 %

*Refer to the Impairment and other charges (gains), net line within the Other Operating (Income) Expense, Net section on page 29 for details of the charges in this table.

• Excluding the current and prior year charges shown in the table above, operating income increased 3% (1% in constant currencies) for the quarter and 3% (2% in constant currencies) for the nine months.

Results for the quarter reflected positive operating results, primarily due to higher sales-driven Franchised margins in the International Operated Markets, partly offset by higher Selling, general, and administrative expenses in International Developmental Licensed Markets & Corporate.

Results for the nine months reflected positive operating results, primarily due to higher sales-driven Franchised margins across all segments, partly offset by lower sales-driven Company-owned and operating margins and higher Selling, general, and administrative expenses in the U.S.

*Refer to the Impairment and other charges (gains), net line within the Other Operating (Income) Expense, Net section above for details of the charges in this table.

• Excluding the charges for the three months ended March 31, 2026 and 2025 shown in the table above, operating income increased 11% (5% in constant currencies).

Results primarily reflected higher sales-driven Franchised margins across all segments.

• Operating margin is defined as operating income as a percent of total revenues.

1 unchanged sentence

Additionally, temporary restaurant closures, which vary by segment, impact the contribution of each segment to the consolidated operating margin.

The increase in non-GAAP operating margin was primarily due to the prior year sale of McDonald's business in South Korea, partly offset by the prior year acquisition of McDonald's business in Israel and higher Selling, general and administrative expenses.

The increase in non-GAAP operating margin was primarily due to higher other operating income.

Interest Expense

• Interest expense increased 7% (5% in constant currencies) for the quarter and 4% (4% in constant currencies) for the nine months.

Results for both periods reflected higher average debt balances as well as higher average interest rates.

• Interest expense increased 6% (4% in constant currencies) primarily due to higher average debt balances and the impact of foreign currency translation.

Nonoperating (Income) Expense, Net

1 unchanged sentence

Dollars in millions

Quarters Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Quarters Ended

Interest income $ (7) $ (17)

2 unchanged sentences

Total $ 11 $ ( 57 )

• Interest income for the nine months decreased due to lower average cash balances and lower average interest rates.

• The effective income tax rate was 22.8 % and 20.7 % for the quarters ended 2025 and 2024, respectively, and 21.4 % and 20.5 % for the nine months ended 2025 and 2024, respectively.

The effective tax rates for the quarter and nine months ended 2024 reflected discrete income tax benefits related to restructuring initiatives and global audit progression.

• On July 4, 2025, Public Law Number 119-21 (Bill H.R.

1) was enacted in the U.S.

with varying effective dates beginning in 2025.

The new legislation extends certain provisions enacted with the Tax Cuts and Jobs Act, while introducing or restoring international and domestic business provisions that impact U.S.

corporations.

The Company recorded the impacts of the legislation in the third quarter of 2025, which were not material to the Condensed Consolidated Financial Statements.

• Interest income decreased due to lower average interest rates.

• The effective income tax rate was 22.0 % and 19.8 % for the three months ended March 31, 2026 and 2025, respectively.

The effective tax rate for the three months ended March 31, 2025 reflected income tax benefits related to restructuring initiatives.

The Company has a long history of generating significant cash from operations and has substantial credit capacity to fund operating and discretionary spending to invest in opportunities to grow the business, such as restaurant development, in addition to funding debt service payments, dividends and share repurchases.

Cash provided by operations totaled $7.9 billion and exceeded capital expenditures by $5.6 billion for the nine months 2025.

Cash provided by operations slightly increased compared with the nine months 2024, in line with operating results.

Cash used for investing activities totaled $2.8 billion for the nine months 2025, a decrease of $1.8 billion compared with the nine months 2024.

The decrease was primarily due to the Company's acquisition of an increased ownership stake in McDonald's China business in the prior year.

Cash used for financing activities totaled $3.9 billion for the nine months 2025, a decrease of $1.7 billion compared with the nine months 2024.

The decrease was primarily due to higher bond issuances and lower treasury stock purchases in the current year.

Cash provided by operations totaled $2.4 billion and exceeded capital expenditures by $1.7 billion.

Cash provided by operations was relatively flat compared to the three months ended 2025, as changes in working capital offset improved operating results.

Cash used for investing activities totaled $777 million, a slight increase from the three months ended 2025, reflecting the Company's increased capital expenditures in the current year.

Cash used for financing activities totaled $1.2 billion, a decrease of $318 million compared to the three months ended 2025.

The decrease was primarily due to lower bond repayments in the current year.

Based on current conditions, the following is provided to assist in forecasting the Company's future results for 2026.

• The Company expects net restaurant unit expansion will contribute slightly over 2% to 2025 Systemwide sales growth, in constant currencies.

• 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 2025 to increase about 4% driven primarily by higher average debt balances and higher average interest rates.

• 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%.

4 unchanged sentences

The Company expects to open about 750 restaurants in the U.S.

and International Operated Markets, and that developmental licensees and affiliates will contribute capital towards about 1,600 restaurant openings in their respective markets.

The Company expects nearly 1,800 net restaurant additions in 2025.

and International Operated Markets, and that developmental licensees and affiliates will contribute 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 expects to achieve a free cash flow conversion rate in the low-to-mid 80% range.

9 unchanged sentences

You should not rely unduly on forward-looking statements.

Our business results are subject to a variety of risks, including those that are described below and elsewhere in our filings with the SEC.

Our business results are subject to a variety of risks, including those that are described below and elsewhere in our filings with the

The risks described below are not the only risks we face.

15 unchanged sentences

Brand value is based in part on consumer perceptions, which are affected by a variety of factors, including the nutritional content and preparation of our food, the ingredients we use, the manner in which we source commodities and general business practices across the System, including the people practices at McDonald’s restaurants.

Consumer acceptance of our offerings is subject to change for a variety of reasons, and some changes can occur rapidly.

For example, nutritional, health, environmental and other scientific studies and conclusions, which continuously evolve and may have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that affect the “informal eating out” (“IEO”) segment or perceptions of our brand, generally or relative to available alternatives.

Our business could also be impacted by business incidents or practices, whether actual or perceived, particularly if they receive considerable publicity or result in litigation or governmental investigations or proceedings, as well as by our perceived position or lack of position on environmental, social responsibility, public policy, geopolitical and similar matters.

In addition, we cannot ensure that franchisees or business partners will not take actions that adversely affect the value and relevance of our brand.

Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the quick-service category of the IEO segment or our brand, culture, operations, suppliers or franchisees.

Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the quick-service category of the "informal eating out" ("IEO") segment or our brand, culture, operations, suppliers or franchisees.

If we are unsuccessful in addressing adverse commentary or perceptions, whether or not accurate, our brand and financial results may suffer.

1 unchanged sentence

Our continued success depends on our System’s ability to build upon our historic strengths and competitive advantages.

In order to do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and industry trends in food sourcing, food preparation, food offerings, and consumer behavior and preferences, including with respect to the use of digital channels and environmental and social responsibility matters.

To do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and industry trends in sourcing, food and beverage preparation, menu offerings, and consumer behavior and preferences, including with respect to the use of digital channels, health and wellness trends and environmental and social responsibility matters.

If we are not able to predict, or quickly and effectively respond to, these changes, or if our competitors are able to do so more effectively, our financial results could be adversely impacted.

Consumer acceptance of our menu offerings is subject to change for a variety of reasons, and some changes can occur rapidly.

For example, health, environmental and other scientific studies and practices (such as changes to dietary guidelines or use of weight-loss medications), continuously evolve and may have contradictory implications, drive popular opinion, regulation, and alter consumer behavior in ways that affect the IEO segment or perceptions of our brand, generally or relative to available alternatives.

Our ability to build upon our strengths and advantages also depends on the impact of pricing, promotional and marketing plans across the System, and the ability to adjust these plans to respond quickly and effectively to evolving customer behavior and preferences, as well as shifting economic and competitive conditions.

30 unchanged sentences

In particular, we may be involved in intellectual property claims, including often aggressive or opportunistic attempts to enforce patents used in information technology systems, which might affect our operations and results.

Any claim of infringement, whether

or not it has merit, could, particularly in rapidly evolving areas, be time consuming, or result in costly litigation and could also have an adverse impact on our business.

In addition, we cannot ensure that franchisees and other third parties who hold licenses to our intellectual property will not take actions that adversely affect the value of our intellectual property.

Any claim of infringement, whether or not it has merit, could, particularly in rapidly evolving areas, be time consuming, or result in costly litigation and could also have an adverse impact on our business.

We cannot ensure that franchisees and other third parties who hold licenses to our intellectual property will not take actions that adversely affect the value of our intellectual property.

Moreover, rapid technological developments, including artificial intelligence (AI)-driven tools, may increase our exposure to existing intellectual property risks, including theft or unlicensed use, intellectual property disputes and enforcement challenges.

The global scope of our business subjects us to risks that could negatively affect our business.

12 unchanged sentences

Supply chain interruptions and related price increases have in the past and may in the future adversely affect us as well as our suppliers and franchisees, whose performance may have a significant impact on our results.

Such interruptions and price increases could be caused by shortages, inflationary pressures, tariffs, unexpected increases in demand, transportation-related issues, labor-related issues, technology-related issues, weather-related events, natural disasters, acts of war, terrorism or other hostilities, or other factors beyond our control or that of our suppliers or franchisees.

Such interruptions and price increases could be caused by shortages, inflationary pressures, tariffs, unexpected increases in demand, transportation-related issues, labor-related issues, technology-related issues, weather-related events, natural disasters, geo-political tensions, acts of war, terrorism or other hostilities, or other factors beyond our control or that of our suppliers or franchisees.

Interruptions in our System’s supply chain or ineffective contingency planning can increase our costs, impact ingredient quality, delay new restaurant openings, and/or limit the quality or availability of products, equipment and other materials that are critical to our System’s operations or to restaurant development.

44 unchanged sentences

A significant change in real estate values, or an increase in costs as a result of any of these factors, could adversely affect our operating results.

Information technology system failures or interruptions, or breaches of network security, may impact our operations or cause reputational harm.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties to conduct our business, whether developed and maintained by us or provided by third parties.

Information technology system failures or interruptions, breaches of network security, or misuse of technology tools may impact our operations or cause reputational harm.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties, whether developed and maintained by us or provided by third parties.

Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions.

In addition, the artificial intelligence tools we are incorporating into certain aspects of our business may not generate the intended efficiencies and may impact our business results.

Security incidents and breaches have from time to time occurred and may in the future occur involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers.

These may include such things as unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, deepfakes and other malicious uses of artificial intelligence, introduction of malware or ransomware, other disruptive problems caused by hackers or unintentional events.

Security incidents and breaches have occurred from time to time and may occur in the future involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers.

Additionally, cybersecurity threats continue to become more sophisticated, including AI-enabled attacks and deepfake technology.

Incidents may include unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, deepfakes and other malicious uses of artificial intelligence, introduction of malware or ransomware, other disruptive problems caused by hackers or unintentional events.

Certain of these technology systems contain personal, confidential, financial and other information of our customers, employees, franchisees and their employees, suppliers and other third parties, as well as financial, proprietary and other confidential information related to our business.

Despite response procedures and measures in place in the event an incident occurs, it could result in disruptions, shutdowns, or a security breach including the theft or unauthorized disclosure of certain of the above-described information.

Despite response procedures and measures in place in the event an incident occurs, an event could result in disruptions, shutdowns, or a security breach including the theft or unauthorized disclosure of certain of the above-described information.

The actual or alleged occurrence of any of these types of incidents could result in mitigation costs, reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including administrative fines, criminal or civil penalties or civil liabilities.

5 unchanged sentences

While we maintain insurance coverage designed to address certain aspects of cybersecurity risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.

In addition, the AI tools we are incorporating into certain aspects of our business may not generate the intended efficiencies, may increase our exposure to risks (both known and unknown), and could adversely impact our business results.

These risks include potential operational disruptions, data integrity issues, and unintended consequences from algorithmic decision-making.

Further, emerging global and U.S.

regulations governing AI use – including requirements for responsible use, transparency, bias mitigation, accountability, and explainability – may impose significant compliance obligations and increase reputational risk.

Failure to comply with these standards or to effectively manage associated risks, including ethical considerations such as fairness, non-discrimination, and responsible deployment, could result in regulatory penalties, litigation, operational setbacks, or adverse brand perceptions.

LEGAL AND REGULATORY

1 unchanged sentence

Our regulatory and legal environment worldwide exposes us to complex compliance, litigation and similar risks that could affect our operations and results in material ways.

Many of our markets are subject to increasing, conflicting and highly prescriptive regulations involving, among other matters, restaurant operations, product packaging, marketing, use of information technology systems, the nutritional and allergen content and safety of our food and other products, labeling and other disclosure practices.

Many of our markets are subject to increasing, conflicting and highly prescriptive legislative, regulatory or administrative developments and enforcement priorities involving, among other matters, restaurant operations, product packaging and extended producer responsibility, marketing, use of information technology systems, the nutritional and allergen content and safety of our food and other products, labeling and other disclosure practices.

Compliance efforts with those regulations may be affected by ordinary variations in food preparation among our own restaurants and the need to rely on the accuracy and completeness of information from third-party suppliers.

28 unchanged sentences

We are subject to legal and compliance risks and associated liability related to privacy and data protection requirements, including those associated with our technology-related services and platforms made available to business partners, customers, employees, franchisees or other third parties.

An increasing number of our markets have enacted new privacy and data protection requirements (including the European Union’s General Data Protection Regulation and various U.S.

An increasing number of our markets have enacted privacy and data protection requirements (including the European Union’s General Data Protection Regulation and various U.S.

state-level laws), and further requirements are likely to be proposed or enacted in the future.

Failure to comply with these privacy and data protection laws could result in legal proceedings and substantial administrative fines, criminal or civil penalties or civil liabilities and materially adversely impact our financial results or brand perceptions.

Additionally, as we expand digital engagement, data collection and personalization through AI, we face new and heightened risks under laws and regulations, including U.S.

state-level regulations and the EU AI Act.

Non-compliance or misuse of personal data could lead to significant fines, litigation, and reputational harm.

MACROECONOMIC AND MARKET CONDITIONS

8 unchanged sentences

The duration and scope of a health epidemic or pandemic can be difficult to predict and depends on many factors, including the emergence of new variants and the availability, acceptance and effectiveness of preventative measures.

A health epidemic or pandemic may also heighten other risks disclosed

in these Risk Factors, including, but not limited to, those related to the availability and costs of labor and commodities, supply chain interruptions, consumer behavior, and consumer perceptions of our brand and industry.

A health epidemic or pandemic may also heighten other risks disclosed in these Risk Factors, including, but not limited to, those related to the availability and costs of labor and commodities, supply chain interruptions, consumer behavior, and consumer perceptions of our brand and industry.

Changes in commodity and other operating costs could adversely affect our results of operations.

25 unchanged sentences

In recent years, there has been an increasing focus by stakeholders – including employees, franchisees, customers, suppliers, governmental and non-governmental organizations and investors – on environmental and social impact matters.

A failure, whether real or perceived, to address environmental and social impact matters or to achieve progress on our environmental and social impact initiatives on the anticipated timing or at all, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, consumer perceptions of our brand, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity.

Conversely, our taking a position, whether real or perceived, on environmental and social impact, public policy, geopolitical and similar matters could also adversely impact our business.

A failure, whether real or perceived, to address environmental and social impact matters or to achieve progress on our environmental and social impact initiatives as intended, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, brand perception, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity.

Stakeholder expectations may vary significantly, so our taking a position, whether real or perceived, on environmental and social impact, public policy, geopolitical and similar matters could also adversely impact our business.

Increasing scrutiny of such initiatives, including via legislative, regulatory or administrative developments and enforcement priorities, may create compliance challenges, reputational risks, and potential litigation exposure.

The standards we set for ourselves regarding environmental and social impact matters, and our ability to meet such standards, may also impact our business.

For example, we are working to manage risks and costs to our System related to climate change, greenhouse gases, and diminishing energy and water resources, and we have announced initiatives relating to, among other things, climate action, sustainability, and responsible sourcing.

In addition, we are engaging in social impact initiatives, including community engagement and philanthropy;

as well as our commitment to inclusion.

In addition, we are engaging in social impact initiatives, including community engagement, philanthropy, and our commitment to inclusion.

We have faced increased scrutiny related to reporting on and achieving these initiatives, as well as continued public focus on similar matters, such as packaging and waste, animal health and welfare, deforestation and land use.

We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional

commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks.

We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks.

These additional commitments may or may not overlap, and may in some cases conflict, with new disclosure required in these areas.

Moreover, addressing environmental and social impact matters requires Systemwide as well as third party coordination and alignment, over which we do not have complete control and which may be unpredictable.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis