McDonald's Corporation (MCD) Earnings & Analysis

Latest quarter

McDonald’s reported Q2 FY2026 revenue of $7.1 billion, up from $6.8 billion in Q2 FY2025, a 3.74% increase. The company’s revenue was 0.51% below the consensus, although both the reported revenue and consensus revenue were displayed as $7.1 billion.

McDonald’s reported adjusted EPS of $3.38, compared with the consensus of $3.32, or 1.81% above the consensus. The company reported diluted EPS of $3.32, up from $3.14 a year earlier, a 5.73% increase.

McDonald’s said global comparable sales increased 1.3%, while system-wide sales grew 4% in constant currency. The company said U.S. comparable sales rose 0.8%, International Operated Markets comparable sales rose 1.5%, and International Developmental Licensed Markets comparable sales rose 1.9%.

McDonald’s reported a gross margin of 58.0%, compared with 57.9% a year earlier, while operating margin was 47.0%, compared with 47.2%. The company reported free cash flow of $2.0 billion, up from $1.3 billion a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chris Kempczinski said the U.S. business slowed during Q2 after a solid start to the year, with comparable-sales growth of 0.8% falling below the company’s expectations. He said inconsistent execution of the everyday affordable-price menu, restaurant teams handling too many deployments, and marketing programs that did not meet expectations affected U.S. results.

Ian Borden said inconsistent restaurant-level execution and customer awareness below target limited the benefit from the under-$3 menu. He said the business reduced digital offers and discontinued a dollar-based add-on offer while investing behind McValue, which affected visits from some loyal customers. Kempczinski said about one-third of the U.S. system did not execute the affordable-price menu according to the company’s recommended pricing guidance.

Kempczinski said McDonald’s was responding with national digital flash offers, more personalized offers for loyal users, and marketing support for existing value offerings. Borden said U.S. comparable sales were slightly negative in July, and he said the company expected its actions to take time to affect results. The company did not quantify a U.S. comparable-sales outlook for Q3.

Borden said comparable sales in International Operated Markets increased 1.5%, led by Germany, Australia and the UK, while International Developmental Licensed Markets increased 1.9%, led by Japan. He said the company expected comparable-sales growth in both international segments to accelerate sequentially in Q3 from their Q2 rates.

On profitability and investment, Borden said McDonald’s generated more than $4 billion in restaurant margins during Q2 and reported a year-to-date adjusted operating margin of 46.9%. He said the company remained on track for general and administrative expenses of about 2.2% of system-wide sales for full-year 2026 and expected global-system investments to begin reducing G&A as a percentage of sales in 2027.

Analysts asked about the revised restaurant-development timetable, and Borden said cumulative development-cost inflation and a pressured consumer environment led McDonald’s to adjust its pace while continuing to assess new sites against return thresholds. Kempczinski said McDonald’s Next would focus on food taste and quality, customer engagement and simpler restaurant operations, with the company expecting the strategy to be funded through productivity opportunities and top-line growth.

Guidance

McDonald’s now expects to reach 50,000 restaurants globally in 2028, replacing its previous expectation of reaching that level by the end of 2027. The company said it remains on track to open about 2,600 gross restaurants by the end of 2026.

Borden said McDonald’s currently estimates a foreign-currency translation tailwind of about 15 cents to full-year 2026 adjusted EPS, compared with its prior estimate of $0.20 to $0.30. He said the foreign-exchange estimate was directional because exchange rates can change.