Snapshot

Revenue was $13.2 billion, operating income was $1.6 billion, and net income was $1.2 billion in FY2026. Diluted EPS was $10.38 in FY2026, while free cash flow was $1.1 billion in FY2026.

Revenue was $3.2 billion, gross profit was $656.0 million, and operating income was $319.3 million in Q1 FY2027. Net income was $233.4 million and diluted EPS was $2.04 in Q1 FY2027. Revenue was $13.4 billion, net income was $1.2 billion, and diluted EPS was $10.23 in the TTM to Q1 FY2027.

Growth

Revenue increased 9.39% in FY2026 against FY2025, reaching $13.2 billion in FY2026. Revenue compound annual growth was 8.00% in FY2023–FY2026 and 12.9% in FY2021–FY2026. Diluted EPS increased 17.2% in FY2026 against FY2025 to $10.38 in FY2026; its compound annual growth was 9.11% in FY2023–FY2026 and 16.8% in FY2021–FY2026.

Free cash flow increased 9.70% in FY2026 against FY2025 to $1.1 billion in FY2026, with compound annual growth of 4.98% in FY2023–FY2026 and 4.15% in FY2021–FY2026. Revenue increased 5.11%, while diluted EPS decreased 6.85% and free cash flow decreased 41.2%, in Q1 FY2027 against Q1 FY2026.

Profitability

Gross margin was 21.7%, operating margin was 12.0%, pre-tax margin was 10.5%, and net margin was 9.13% in FY2026. Gross margin changed 0.9 percentage points in FY2021–FY2026, while operating margin changed 3.0 percentage points, pre-tax margin changed 2.5 percentage points, and net margin changed 0.4 percentage points in FY2021–FY2026.

Operating margin increased 0.7 percentage points, pre-tax margin increased 0.7 percentage points, and net margin increased 0.4 percentage points in FY2025–FY2026; gross margin decreased −0.2 percentage points in FY2025–FY2026. Return on equity was 53.4%, return on assets was 9.48%, and return on invested capital was 27.3% in FY2026. No industry-median profitability measures are reported.

Balance sheet

Total debt was $1.6 billion, net debt was $1.4 billion, and cash and short-term investments were $219.5 million in FY2026. Shareholders’ equity was $2.2 billion and working capital was −$2.1 billion in FY2026. Book value per share was $19.11 in FY2026.

Net debt was $1.4 billion in Q1 FY2027, unchanged from $1.4 billion in Q4 FY2026, and down −$508.5 million in Q1 FY2027 against Q1 FY2026. The current ratio was 0.3× and debt to equity was 0.8× in Q1 FY2027. Management reported that current liabilities increased in the first three months of fiscal 2027 primarily because of increased short-term debt.

Cash flow & capital return

Operating cash flow was $1.9 billion, capital expenditure was $714.9 million, and free cash flow was $1.1 billion in FY2026. Free cash flow represented 94.3% of net income in FY2026. Dividends paid were $693.0 million and net share repurchases were $646.7 million in FY2026, for capital returned to shareholders of $1.3 billion in FY2026.

Capital returned to shareholders was $6.0 billion in FY2022–FY2026. Weighted average shares were 115.5 million shares in FY2026, and the share count changed −11.4% in FY2021–FY2026. Free cash flow was $107.7 million in Q1 FY2027. Management attributes lower operating cash flow in the first three months of fiscal 2027 primarily to changes in working capital and higher capital expenditure to new restaurant construction and remodel spending.

Valuation

Market capitalisation was $22.8 billion as of October 2, 2026. P/E was 19.4× as of October 2, 2026, compared with a five-year median of 19.3× as of October 2, 2026, over the five fiscal years to FY2026, and an industry median of 22.5× as of October 2, 2026. P/S was 1.7× as of October 2, 2026, compared with a five-year median of 1.8× and a ten-year median of 1.7× as of October 2, 2026, as well as an industry median of 0.9× as of October 2, 2026.

P/B was 11.0× as of October 2, 2026, above its five-year median of 8.8×, ten-year median of 6.8×, and industry median of 2.0×. EV/Sales was 1.8× as of October 2, 2026, below its five-year median of 1.9× and above its ten-year median of 1.7× and industry median of 1.3×. EV/Cash flow was 22.8× as of October 2, 2026, above its five-year median of 20.2× and ten-year median of 19.3×.

What changed since last quarter

Revenue was $3.2 billion in Q1 FY2027, a change of −13.9% against Q4 FY2026 and 5.11% against Q1 FY2026. Diluted EPS was $2.04 in Q1 FY2027, a change of −41.9% against Q4 FY2026 and −6.85% against Q1 FY2026. Free cash flow was $107.7 million in Q1 FY2027, a change of −71.9% against Q4 FY2026 and −41.2% against Q1 FY2026.

Gross margin was 20.5% and operating margin was 9.98% in Q1 FY2027; their changes were −2.8 percentage points and −3.9 percentage points, respectively, against Q4 FY2026. Management attributes the year-over-year sales increase in the first three months of fiscal 2027 to net new restaurants and blended same-restaurant sales growth. Management cites increased marketing and media activity, pre-opening costs from new openings, higher depreciation associated with openings, and increased net interest expense from short-term borrowings among the quarter’s cost changes.

Open questions

• How will same-restaurant sales develop across the company’s restaurant businesses?
• How will changes in food, labor, marketing, and restaurant-opening costs affect future margins?
• How will short-term borrowings and working-capital movements affect operating cash flow?
• How will new restaurant construction, remodel spending, dividends, and repurchases be funded?

Sources

• Form 10-Q filed October 2, 2026 — management’s discussion and analysis