What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-07 · 201 added, 136 removed, 468 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 45,699 McDonald's restaurants at March 31, 2026, approximately 95% were franchised.

Of the 46,028 McDonald's restaurants at June 30, 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.

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Strategic Direction

The Company’s Accelerating the Arches growth strategy (the “Strategy”) encompasses all aspects of McDonald’s business as the leading global omni-channel restaurant brand.

Our Strategy reflects the Company’s purpose, mission and values, as well as growth pillars that build on the Company’s competitive advantages.

Introduced in 2020 and refreshed in 2023, the Company’s Accelerating the Arches strategy has been built on three growth pillars:

Maximize our Marketing, Commit to the Core and Double Down on the 4D’s (Digital, Delivery, Drive Thru and Restaurant Development).

Through these growth pillars, the Company has invested in culturally relevant marketing, focused on its iconic products, expanded its digital ecosystem and delivery capabilities, enhanced its drive thru advantage and accelerated restaurant development.

Building on the foundation established by Accelerating the Arches , in June 2026, the Company introduced McDonald’s > NEXT (the “NEXT Strategy”), its strategy to unlock the next era of growth and productivity.

McDonald's > NEXT is how the Company will meet customers’ expectations for great value, great tasting food, great hospitality, convenience and affordability by elevating taste and quality, co-creating with our fans, unlocking better customer and restaurant experiences, and redefining hospitality.

Purpose, Mission and Values

The following purpose, mission and values underpin the Company’s success and are at the heart of our Strategy.

As was true with the Accelerating the Arches strategy, at the heart of the NEXT Strategy are the Company’s purpose, mission and values which underpin our success.

Through its size and scale, the Company embraces and prioritizes its role and commitment to the communities in which it operates through its purpose to feed and foster communities, and its mission to make delicious feel-good moments easy for everyone.

The Company is guided by five core values that define who it is and how it runs the business across the three-legged stool of McDonald's franchisees, suppliers and employees:

Serve - We put our customers and people first;

Serve - We put our guests and people first;

Inclusion - We open our doors to everyone;

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The Company believes that its people, all around the world, set it apart and bring these values to life daily.

The NEXT Strategy continues to reflect and advance the Company’s purpose, mission and values, and is comprised of four key pillars designed around one simple ambition:

to be more customers’ first choice.

Growth Pillars

The following growth pillars, M-C-D, build on historic strengths and articulate areas of further opportunity.

Under our Strategy, the Company will:

• M aximize our Marketing by investing in new, culturally relevant approaches, grounded in fan truths, to effectively communicate the story of our brand, food and purpose.

The Company continues to build relevance with customers through emotional connections and world class creative, which are central to the brand’s “Feel-Good Marketing” approach.

This is exemplified by campaigns that elevate the entire brand and continue to be scaled around the globe to connect with customers in authentic and relatable ways.

The Company is committed to a marketing strategy that highlights value at every tier of the menu, as providing delicious and affordable menu options remains a cornerstone of the McDonald’s brand.

This includes everyday low-price options on our menu, affordable meal bundles, limited-time deals and personalized value and digital offers available in our mobile app.

• C ommit to the Core menu by tapping into customer demand for the familiar and focusing on serving our iconic products that are beloved by customers around the world such as our World Famous Fries, Big Mac, Quarter Pounder and Chicken McNuggets, which are some of our seventeen unique billion-dollar brands.

Building on its foundational strength with burgers, the Company will continue to evolve and innovate its longest-standing menu item with plans to continue to implement “Best Burger”;

a series of operational and formulation changes designed to deliver hotter, juicier, tastier burgers to nearly all markets by the end of 2026.

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 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.

• D ouble Down on the 4D's:

Digital, Delivery, Drive Thru and Restaurant Development by continuing to leverage competitive strengths and building a powerful digital experience growth engine to deliver a personalized and convenient customer experience.

As another way to unlock further growth, the Company plans to continue to accelerate the pace of restaurant openings and technology innovation so that whenever and however customers choose to interact with McDonald’s, they can enjoy a fast, easy experience that meets their needs.

The Company’s digital experience is transforming how customers order, pay and receive their food.

Through digital tools, customers can access personalized offers, participate in a loyalty program, order through our mobile app and receive McDonald's food through the channel of their choice.

We are also providing increased convenience to customers through “Ready on Arrival”;

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 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 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).

The Company continues to scale this capability and expects to increase the percentage of Systemwide delivery sales originating from our mobile app to 30% by the end of 2027.

The Company also has long-term strategic partnerships with delivery providers that continue to benefit the Company, customers and franchisees by optimizing operational efficiencies and creating a seamless customer experience.

◦ Drive Thru:

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.

McDonald’s network currently provides unmatched scale and convenience for customers, while also offering significant growth opportunities, such as adding additional drive thru lanes to increase capacity and improve speed and efficiency.

The Company continues to build on its drive thru advantage, as the vast majority of new restaurant openings in the U.S.

and International Operated Markets will include a drive thru.

◦ Restaurant Development:

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 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.

Foundation and Platforms

Foundational to our Strategy is keeping the customer and restaurant crew at the center of everything the Company does, along with focusing relentlessly on running great restaurants, empowering our people and continuing to modernize our ways of working.

Further, as part of the Company’s plans for long-term growth and solidifying McDonald’s leadership position, the Company will continue to develop and implement three technology-enabled platforms designed to build our competitive advantages, cement our place in culture and stay one step ahead of our customers’ expectations.

Together, our foundation and platforms will extend the Company’s leadership position and unlock new growth opportunities and efficiencies for our business over the long-term.

Our platforms are:

The Company is building one of the world’s largest consumer platforms to fuel engagement , which will bring together the best of our brand and utilize our physical and digital competitive advantages.

The consumer platform will enable the Company to accelerate growth in our loyalty program and drive valuable loyalty customers to visit more frequently.

• Restaurant:

The Company is building the easiest and most efficient restaurant operating platform which enables the Company and franchisees to run restaurants more efficiently and utilize the latest cloud-based technology to make it easier for restaurant crew to deliver exceptional customer service.

The Company intends to deploy new, universal software that all McDonald’s restaurants will run on, enabling restaurants to roll out innovation even faster, with less complexity and more reliability;

and customers will enjoy a more familiar, consistent experience.

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.

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.

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.

• Menu > NEXT is focused on elevating taste and quality across its menu while continuing to strengthen the Company’s position in its core categories:

beef, chicken and beverages.

Through menu innovation and operational excellence, the Company aims to deliver food that customers crave and create experiences that drive guest count growth.

• Consumer > NEXT is focused on creating more personal, relevant and engaging experiences that strengthen customers’ connection to the McDonald’s brand and encourage more visits.

The Company aims to deepen customer relationships by combining the power of its brand, the influence of its fandom, the breadth of its customer insights and the scale of its digital capabilities to drive demand.

• Restaurant > NEXT is intended to improve restaurant efficiency with AI-enabled operating systems that reduce complexity and enable restaurant teams to serve customers great tasting food more effectively.

The Company is focused on improving customer and restaurant experiences through technology, operational simplification, and holistic restaurant design that will improve operations, increase capacity and enhance the experience for crew and customers.

• People > NEXT makes excellence in execution for taste, quality, and hospitality the standard that restaurants are taught, measured on and coached to deliver.

This includes equipping restaurant teams with improved tools, support and smarter ways of working to deliver exceptional hospitality, better serve customers, and strengthen the overall restaurant performance and resulting guest experience.

The NEXT Strategy is aligned with the Company’s capital allocation philosophy of (i) investing in opportunities to grow the business and drive strong returns, including capital expenditures and investments in technology and other capabilities, (ii) prioritizing its dividend, and (iii) repurchasing shares with remaining free cash flow over time.

The Company believes the size, scale, agility and the power of the McDonald’s brand positions it well to execute on the NEXT Strategy and create long-term value for customers, franchisees and shareholders.

Second Quarter and Six Months 2026 Financial Performance

Global comparable sales increased 1.3% for the quarter and 2.5% for the six months.

comparable sales increased 0.8% for the quarter and 2.3% for the six months.

Comparable sales results for both periods were primarily driven by positive check growth, including favorable product mix, partly offset by negative comparable guest counts.

• International Operated Markets comparable sales increased 1.5% for the quarter and 2.6% for the six months.

Most markets reflected positive comparable sales for both periods, led by Germany, Australia and the U.K., partly offset by France.

• International Developmental Licensed Markets comparable sales increased 1.9% for the quarter and 2.6% for the six months.

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

Comparable sales results for both periods were partly offset by negative comparable sales in China.

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

• Consolidated revenues increased 4% (2% in constant currencies) for the quarter and 6% (3% in constant currencies) for the six months.

• Systemwide sales increased 5% (4% in constant currencies) for the quarter and 8% (5% in constant currencies) for the six months.

• Consolidated operating income increased 3% (2% in constant currencies) for the quarter and 7% (4% in constant currencies) for the six months.

Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 29 of this report, consolidated operating income increased 4% (2% in constant currencies) for the quarter and 7% (3% in constant currencies) for the six months.

• Diluted earnings per share was $ 3.32 for the quarter, an increase of 6% (5% in constant currencies) and $ 6.10 for the six months, an increase of 6% (3% in constant currencies).

Excluding current and prior year charges detailed in the Net Income and Diluted Earnings Per Share section on page 23 of this report, diluted earnings per share for the quarter was $3.38, an increase of 6% (5% in constant currencies) and $6.21, an increase of 6% (3% in constant currencies) for the six months.

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.

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Dollars in millions, except per share data

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

Quarters Ended June 30, 2026 2025 Inc/(Dec)

Revenues from franchised restaurants $ 4,393 $ 4,213 4 %

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Interest expense 409 390 5

Nonoperating (income) expense, net ( 6 ) ( 18 ) (66)

Income before provision for income taxes 2,936 2,861 3

Provision for income taxes 574 608 (6)

Net income $ 2,362 $ 2,253 5 %

Earnings per common share-basic $ 3.33 $ 3.15 6 %

Earnings per common share-diluted $ 3.32 $ 3.14 6 %

Six Months Ended June 30, 2026 2025 Inc/(Dec)

Revenues from franchised restaurants $ 8,399 $ 7,874 7 %

Sales by Company-owned and operated restaurants 4,842 4,590 5

Other revenues 375 334 12

Total revenues 13,616 12,799 6

Operating costs and expenses

Franchised restaurants-occupancy expenses 1,356 1,274 6

Company-owned and operated restaurant expenses 4,170 3,937 6

Other restaurant expenses 329 289 14

Selling, general & administrative expenses

Depreciation and amortization 222 213 4

Other 1,354 1,170 16

Other operating (income) expense, net ( 106 ) 36 n/m

Total operating costs and expenses 7,324 6,918 6

Operating income 6,292 5,880 7

Interest expense 809 766 6

Nonoperating (income) expense, net 5 ( 76 ) n/m

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Impact of Foreign Currency Translation

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.

The impact of foreign currency translation on consolidated operating results for the quarter and six months ended June 30, 2026 primarily reflected the strengthening of most major currencies against the U.S.

Dollar, primarily driven by the Euro and the Australian Dollar.

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.

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Benefit/ (Cost)

Quarters Ended March 31, 2026 2025 2026

Quarters Ended June 30, 2026 2025 2026

Revenues $ 7,099 $ 6,843 $ 116

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Earnings per share-diluted $ 3.32 $ 3.14 $ 0.03

Benefit/ (Cost)

Six Months Ended June 30, 2026 2025 2026

Revenues $ 13,616 $ 12,799 $ 429

Franchised margins 7,044 6,600 198

Company-owned and operated margins 672 653 26

Selling, general & administrative expenses 1,576 1,383 (22)

Operating income 6,292 5,880 202

Net income 4,345 4,121 121

Earnings per share-diluted $ 6.10 $ 5.74 $ 0.17

Net Income and Diluted Earnings per Share

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 .

For the quarter, net income increased 5% (4% in constant currencies) to $ 2,362 million, and diluted earnings per share increased 6% (5% in constant currencies) to $ 3.32 .

Foreign currency translation had a positive impact of $0.03 on diluted earnings per share.

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.

For the six months, net income increased 5% (3% in constant currencies) to $ 4,345 million, and diluted earnings per share increased 6% (3% in constant currencies) to $ 6.10 .

Foreign currency translation had a positive impact of $0.17 on diluted earnings per share.

Results for 2026 included the following:

• Net pre-tax charges of $52 million, or $0.06 per share, for the quarter and $99 million, or $0.11 per share, for the six months, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working ( Accelerating the Organization )

Results for 2025 included the following:

• Pre-tax charges of $43 million, or $0.05 per share, for the quarter and $109 million, or $0.12 per share, for the six months, primarily related to restructuring charges associated with Accelerating the Organization

Excluding the above items, results for the quarter and six months ended June 30, 2026 were primarily driven by higher sales-driven Franchised margins and higher Other operating income, partly offset by higher Selling, general and administrative expenses.

During the quarter, the Company paid a dividend of $1.86 per share, or $1.3 billion, resulting in total dividends paid for the six months of $2.6 billion.

Additionally, during the quarter, the Company repurchased 3.0 million shares of stock for $858 million, resulting in total purchases for the six months of 4.2 million shares, or $1.3 billion.

NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION

Dollars in millions, except per share data

Quarters Ended March 31,

Quarters Ended June 30,

Net Income Earnings per share - diluted

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Non-GAAP $ 2,402 $ 2,286 5 % 4 % $ 3.38 $ 3.19 6 % 5 %

Six Months Ended June 30,

Net Income Earnings per share - diluted

2026 2025 Inc/ (Dec) Inc/ (Dec)

Translation 2026 2025 Inc/ (Dec) Inc/ (Dec)

GAAP $ 4,345 $ 4,121 5 % 3 % $ 6.10 $ 5.74 6 % 3 %

(Gains)/Charges, net of tax 76 84 0.11 0.12

Non-GAAP $ 4,421 $ 4,206 5 % 2 % $ 6.21 $ 5.86 6 % 3 %

The Company's revenues consist of fees from restaurants owned and operated by franchisees, developmental licensees and affiliates and sales by Company-owned and operated restaurants.

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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 March 31, 2026.

Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at June 30, 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 March 31, 2026 2025 Inc/ (Dec) Inc/ (Dec)

Quarters Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

15 unchanged sentences

Total Revenues $ 7,099 $ 6,843 4 % 2 %

• 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.

Six Months Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

$ 3,691 $ 3,579 3 % 3 %

International Operated Markets 3,717 3,393 10 3

International Developmental Licensed Markets & Corporate 990 902 10 7

Total $ 8,399 $ 7,874 7 % 4 %

Company-owned and operated sales

$ 1,513 $ 1,515 — % — %

International Operated Markets 3,084 2,873 7 2

International Developmental Licensed Markets & Corporate 244 202 21 2%

Total $ 4,842 $ 4,590 5 % 1 %

Total Franchised revenues and Company-owned and operated sales

$ 5,204 $ 5,095 2 % 2 %

International Operated Markets 6,802 6,266 9 3

International Developmental Licensed Markets & Corporate 1,235 1,104 12 6

Total $ 13,241 $ 12,464 6 % 3 %

Total Other revenues $ 375 $ 334 12 % 11 %

Total Revenues $ 13,616 $ 12,799 6 % 3 %

• Total Franchised revenues and Company-owned and operated sales increased 4% (2% in constant currencies) for the quarter and increased 6% (3% in constant currencies) for the six months.

Both periods benefited from positive franchised sales performance across all segments.

The International Operated Markets and the International Developmental Licensed Markets also benefited from the positive impact of foreign currency translation and positive Company-owned and operated sales performance for both periods.

Comparable Sales

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

The following table presents the percent change in comparable sales for the quarters and six months ended June 30, 2026 and 2025:

Increase/(Decrease)

Quarters Ended March 31,

Quarters Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

0.8 % 2.5 % 2.3 % (0.5) %

International Operated Markets 1.5 4.0 2.6 1.6

International Developmental Licensed Markets 1.9 5.6 2.6 4.5

Total 3.8 % (1.0) %

Total Company 1.3 % 3.8 % 2.5 % 1.4 %

Systemwide Sales and Franchised Sales

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

The following table presents the percent change in Systemwide sales for the quarter and six months ended June 30, 2026:

SYSTEMWIDE SALES*

Quarter Ended March 31, 2026

Quarter Ended June 30, 2026 Six Months Ended June 30, 2026

Inc/ (Dec) Inc/ (Dec)

Translation Inc/ (Dec) Inc/ (Dec)

2 % 2 % 3 % 3 %

International Operated Markets 6 4 11 5

International Developmental Licensed Markets 8 7 10 7

Total 11 % 6 %

Total Company 5 % 4 % 8 % 5 %

*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 three months ended March 31, 2026 and 2025:

The following table presents franchised sales and the related increases/(decreases) for the quarters and six months ended June 30, 2026 and 2025:

FRANCHISED SALES

Dollars in millions

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

Quarters Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 13,523 $ 13,231 2 % 2 %

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Total $ 34,451 $ 32,760 5 % 4 %

Six Months Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 25,911 $ 25,003 4 % 4 %

International Operated Markets 21,954 19,696 11 5

International Developmental Licensed Markets 18,503 16,865 10 7

Total $ 66,368 $ 61,564 8 % 5 %

Ownership type

Conventional franchised $ 47,528 $ 44,412 7 % 4 %

Developmental licensed 11,884 10,601 12 8

Foreign affiliated 6,956 6,550 6 6

Total $ 66,368 $ 61,564 8 % 5 %

Restaurant Margins

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Inc/ (Dec) Inc/ (Dec)

Quarters Ended March 31, 2026 2025

Quarters Ended June 30, 2026 2025

$ 1,621 $ 1,576 3 % 3 %

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Total $ 4,099 $ 3,939 4 % 3 %

Inc/ (Dec) Inc/ (Dec)

Six Months Ended June 30, 2026 2025

$ 3,048 $ 2,936 4 % 4 %

International Operated Markets 3,005 2,763 9 3

International Developmental Licensed Markets & Corporate 990 901 10 7

Total $ 7,044 $ 6,600 7 % 4 %

Company-owned and operated

$ 151 $ 176 (14) % (14) %

International Operated Markets 508 465 9 4

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

Total $ 672 $ 653 3 % (1) %

Total restaurant margins

$ 3,199 $ 3,112 3 % 3 %

International Operated Markets 3,513 3,228 9 3

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

Total $ 7,716 $ 7,254 6 % 3 %

n/m Not meaningful

• 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.

• Franchised margins for both periods 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 approximately 90% of restaurant margin dollars.

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

primarily reflected the impact of ongoing inflationary cost pressures.

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 for both periods.

• Total restaurant margins included depreciation and amortization expense of $454 million and $425 million for the quarters ended 2026 and 2025, respectively, and $909 million and $839 million for the six months ended 2026 and 2025, respectively.

Selling, General & Administrative Expenses

• 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.

• Selling, general and administrative expenses increased $117 million, or 17% (16% in constant currencies) for the quarter and $193 million, or 14% (12% in constant currencies) for the six months.

Results for both periods primarily reflected higher employee costs, including incentive-based compensation, and costs related to the 2026 Worldwide Owner/Operator convention.

• Selling, general and administrative expenses as a percent of Systemwide sales were 2.2% and 2.1% for the six months ended June 30, 2026 and 2025, respectively.

Other Operating (Income) Expense, Net

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Dollars in millions

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Gains on sales of restaurant businesses $ (40) $ (7) $ (70) $ (15)

3 unchanged sentences

Total $ ( 37 ) $ 29 $ ( 106 ) $ 36

• 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.

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

• The change in asset dispositions and other (income) expense, net for both periods primarily reflected higher gains on sale of excess properties and lower bad debt expense, partly offset by higher litigation settlements.

• Impairment and other charges (gains), net reflected net pre-tax charges of $52 million and $43 million for the quarters ended 2026 and 2025, respectively, and $99 million and $109 million for the six months ended 2026 and 2025, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Operating Income

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Dollars in millions

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

Quarters Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 1,573 $ 1,527 3 % 3 %

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Total $ 3,338 $ 3,232 3 % 2 %

Six Months Ended June 30, 2026 2025 Inc/ (Dec) Inc/ (Dec)

$ 2,953 $ 2,829 4 % 4 %

International Operated Markets 3,230 2,924 10 4

International Developmental Licensed Markets & Corporate 109 127 (14) (33)

Total $ 6,292 $ 5,880 7 % 4 %

Operating margin 46.2 % 45.9 %

• 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 increased $106 million, or 3% (2% in constant currencies), for the quarter and $411 million, or 7% (4% in constant currencies), for the six months.

Results reflected net pre-tax charges of $52 million and $43 million for the quarters ended 2026 and 2025, respectively, and $99 million and $109 million for the six months ended 2026 and 2025, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

OPERATING INCOME & OPERATING MARGIN RECONCILIATION*

Dollars in millions

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

Quarters Ended June 30, Six Months Ended June 30,

2026 2025 Inc/ (Dec) Inc/ (Dec)

Translation 2026 2025 Inc/ (Dec) Inc/ (Dec)

GAAP operating income $ 3,338 $ 3,232 3 % 2 % $ 6,292 $ 5,880 7 % 4 %

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Non-GAAP operating margin 46.9 % 46.8 %

*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.

*Refer to the Impairment and other charges (gains), net line within the Other Operating (Income) Expense, Net section on page 28 for details of the charges in this table.

• Excluding the current and prior year charges shown in the table above, operating income increased 4% (2% in constant currencies) for the quarter and 7% (3% in constant currencies) for the six months.

Results for both periods primarily reflected higher sales-driven Franchised margins and higher other operating income across all segments, partly offset by higher Selling, general, and administrative expenses in the International Developmental Licensed Markets & Corporate.

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

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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 higher other operating income.

The increase in non-GAAP operating margin was primarily due to higher other operating income, partly offset by higher Selling, general and administrative expenses.

Interest Expense

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

• Interest expense increased 5% (4% in constant currencies) for the quarter and 6% (4% in constant currencies) for the six months.

Results for both periods primarily reflected higher average interest rates and the impact of foreign currency translation.

Nonoperating (Income) Expense, Net

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Dollars in millions

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Interest income $ (11) $ (20) $ (19) $ (37)

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Total $ ( 6 ) $ ( 18 ) $ 5 $ ( 76 )

• 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.

• Interest income for both periods decreased due to lower average cash balances and lower average interest rates.

• The effective income tax rate was 19.5 % and 21.3 % for the quarters ended 2026 and 2025, respectively, and 20.7 % and 20.6 % for the six months ended 2026 and 2025, respectively.

The effective tax rate for the quarter ended June 30, 2026 reflected discrete 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 $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.

Cash provided by operations totaled $5.2 billion and exceeded capital expenditures by $3.7 billion for the six months ended June 30, 2026.

Cash provided by operations increased compared to the six months ended June 30, 2025, primarily due to favorable working capital changes and improved operating results.

Cash used for investing activities totaled $1.6 billion for the six months ended June 30, 2026, and was flat compared to the six months ended June 30, 2025.

Cash used for financing activities totaled $3.6 billion for the six months ended 2026, an increase of $1.5 billion compared to the six months ended June 30, 2025.

The increase was primarily due to lower bond issuances in the current year.

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

• The Company expects net restaurant unit expansion will contribute approximately 2.5% to 2026 Systemwide sales growth, in constant currencies.

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and International Operated Markets.

Globally, the Company expects to open approximately 2,600 restaurants.

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 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.

Globally, the Company expects to open approximately 2,600 restaurants in 2026, with about 750 restaurants opening in the U.S.

and International Operated Markets, and developmental licensees and affiliates contributing capital towards more than 1,800 restaurant openings in their respective markets.

The Company expects approximately 2,100 net restaurant additions in 2026, targeting 50,000 global units in 2028.

• The Company expects to achieve a free cash flow conversion rate for 2026 in the low-to-mid 80% range.

Recent Accounting Pronouncements

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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

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

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

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If we do not successfully evolve and execute against our business strategies, we may not be able to drive business growth.

To drive Systemwide sales, operating income and free cash flow growth, our business strategies – including the components of our Accelerating the Arches growth strategy – must be effective in maintaining and strengthening customer appeal and capturing additional market share.

To drive Systemwide sales, operating income and free cash flow growth, our business strategies – including the components of our Accelerating the Arches and McDonald's > NEXT growth strategies – must be effective in maintaining and strengthening customer appeal and capturing additional market share.

Whether these strategies are successful depends mainly on our System’s continued ability to:

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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