McDonald's Q1 Earnings Call Highlights

Key Points

• McDonald’s posted first-quarter 2026 global comparable sales growth of 3.8%, with gains in nearly all of its top 10 markets as value, marketing and menu innovation drove performance.
• The company’s value strategy remains central, highlighted by the updated McValue platform in the U.S. and strong momentum in markets like the U.K., Germany and Australia, while France continued to lag.
• Executives warned of a meaningful second-quarter sales deceleration after a tough comparison to last year’s Minecraft promotion, even as McDonald’s reaffirmed its full-year 2026 targets and continues to monitor inflation and franchisee profitability.

McDonald's NYSE: MCD reported first-quarter 2026 global comparable sales growth of 3.8% and said it gained market share in nearly all of its top 10 markets, as executives emphasized value, marketing and menu innovation as the company’s main growth drivers in a challenging consumer environment.

Chairman and Chief Executive Officer Chris Kempczinski said global systemwide sales rose 6% in constant currency, with “solid growth across each of our operating segments.” He described the company’s strategy as “going three for three” across value, marketing and menu innovation.

“McDonald’s is not going to get beat on value and affordability,” Kempczinski said, adding that the company has been listening to customers and adjusting its offerings to strengthen its value positioning.

Value Platform Remains Central to U.S. Strategy

In the U.S., comparable sales increased 3.9% in the quarter. Chief Financial Officer Ian Borden said McDonald’s delivered positive comparable sales and guest count gaps versus its near-in competitors and maintained market share.

The company highlighted its updated McValue platform, which now includes an everyday affordable price menu with individual items under $3, along with a $4 breakfast meal deal. Borden said the under-$3 menu includes well-known à la carte items available throughout the day, and the company is promoting a $2.50 McDouble and a $1.50 Sausage McMuffin to build awareness. The breakfast deal complements the $5 McChicken and $6 McDouble meal deals that remain on the platform.

Borden said Extra Value Meals, relaunched in September, continued to perform well and helped drive incrementality. He said financial support to franchisees tied to the relaunch is expected to come in below the company’s initial estimate of approximately $35 million, and that support ended at the end of March. Extra Value Meals remain a core part of the menu, he said.

Asked by Morgan Stanley analyst Brian Harbour why McDonald’s was making another iteration of its value program, Kempczinski said the company believes it needs both meal deals and entry-level price points. He said the U.S. approach was informed by international markets, where similar structures are already common.

“You need to have a meal deal offering there,” Kempczinski said. “You also need entry-level price points for those folks who are maybe a little bit more stressed around affordability.”

International Markets Show Broad Strength, With France an Exception

Comparable sales in International Operated Markets also rose 3.9%. Borden said growth was driven primarily by the U.K., Germany and Australia, each of which delivered mid- to high-single-digit comparable sales growth and gained share in the quarter.

In the U.K., Borden pointed to the introduction of Meal Deal Plus in January, priced at GBP 5.59, as a stronger value offer that provided more flexibility than the prior GBP 5 meal deal. In Germany, he said the McSmart platform continued to perform well, supported by marketing that tied affordability to everyday moments.

Australia was cited by Kempczinski as a clear example of the company’s strategy in action. He said McSmart Meals and the Loose Change Menu helped drive traffic, the Friends-themed marketing campaign generated excitement, beef and chicken limited-time offers supported comparable sales, and a beverage test received a strong customer response. Australia delivered mid- to high-single-digit comp growth and posted a third straight quarter of market share gains, he said.

France was identified as an underperforming market. Borden said France’s performance underscored the importance of disciplined value execution, and the market recently launched a new value platform as a first step toward improving performance amid a contracting industry environment.

Comparable sales in International Developmental Licensed Markets rose 3.4%, led by Japan. Borden said McDonald’s maintained share in China and remains on track to open approximately 1,000 new restaurants in China this year.

Beverages, Chicken and Marketing Campaigns Drive Menu Focus

Executives said beverage innovation is becoming an important menu opportunity. Kempczinski said Australia successfully tested a beverage platform in the first quarter, Germany and Canada launched new platforms recently, and U.S. restaurants began offering three refreshers and three crafted sodas under the McCafé brand.

He said early results from the U.S. soft launch were encouraging, and the company plans to introduce additional flavors and Red Bull-infused energy drinks later in the year. Asked why Red Bull was not part of the initial launch, Kempczinski cited operational readiness and the opportunity to bring additional marketing attention to the platform later.

McDonald’s also pointed to chicken as a significant long-term opportunity. In response to Bernstein analyst Danilo Gargiulo, Kempczinski said chicken is larger than beef globally and growing about twice as fast. He said McDonald’s has a mid-40% share in beef but a high-teens share in chicken, leaving meaningful room for growth. Elevated beef costs are also making chicken more attractive from a value standpoint, he said.

Marketing remained a key theme on the call. Kempczinski cited international Friends campaigns, a Super Mario Galaxy Movie Happy Meal, the KPop Demon Hunters partnership with Netflix and the upcoming FIFA World Cup campaign. He said the World Cup’s presence in North America this year could provide a larger opportunity for the U.S., Canada and Mexico than in prior cycles.

Margins, Inflation and Franchisee Profitability Under Scrutiny

McDonald’s reported adjusted earnings per share of $2.83, including a $0.13 benefit from foreign currency translation. On a constant-currency basis, adjusted EPS increased 1% from the prior year. The company generated more than $3.6 billion in restaurant margins and posted an adjusted operating margin of 46%.

Borden said the company is reaffirming its full-year 2026 financial targets and expects foreign currency to be a full-year EPS tailwind of $0.20 to $0.30 based on current exchange rates.

However, Borden said U.S. company-operated margins were “not acceptable.” Kempczinski said U.S. company-operated restaurants invested in additional labor while being restrained on pricing, which pressured performance. He said McDonald’s is evaluating whether the restaurants are best operated by the company or by franchisees.

“We’re always looking to put the restaurant in the hands of the best operator,” Kempczinski said.

Executives also discussed inflation pressures, particularly beef costs and potential supply chain disruption related to the war in the Middle East. Borden said McDonald’s expects U.S. food and paper inflation in the low- to mid-single-digit range and International Operated Markets inflation in the mid-single digits for 2026, supported by hedging and supplier relationships. Longer term, he said there is increased risk of higher inflation due to global supply chain disruptions.

Kempczinski said franchisees in both the U.S. and international markets are feeling pressure on cash flow, though he added that the system remains financially strong.

Executives Warn of Q2 Deceleration After April Comparison

Borden said April comparable sales in both the U.S. and International Operated Markets were slightly negative, as expected, due to a difficult comparison against last year’s successful Minecraft promotion. As a result, McDonald’s expects a “meaningful deceleration” in second-quarter comparable sales from the 3.9% growth reported in both segments in the first quarter.

Even so, Borden said the company expects comp sales to accelerate on a two-year stack basis in those segments. For International Developmental Licensed Markets, second-quarter comp growth is expected to decelerate from the first quarter, reflecting volatility in the Middle East and parts of Asia, while still accelerating slightly on a two-year basis.

Kempczinski said higher-income consumers remain resilient, while low-income consumers are still declining, though not as sharply as six to 12 months ago. He said McDonald’s believes its value program has helped recapture some low-income customers, but higher gas prices are likely to keep pressure on that cohort.

Looking ahead, executives said the company continues to target about 50,000 restaurants by the end of 2027, though Kempczinski said McDonald’s is reviewing its development pipeline in light of rising construction costs and supply chain challenges. He said the company is not “chasing an absolute growth number” and will drop projects that no longer meet return thresholds.

About McDonald's NYSE: MCD

McDonald's Corporation NYSE: MCD is a global quick-service restaurant company best known for its hamburgers, French fries and breakfast offerings. The company develops, operates and franchises a system of restaurants that sell a range of food and beverage items, including signature products such as the Big Mac, Quarter Pounder, Chicken McNuggets, McCafé coffee beverages and a variety of salads, desserts and seasonal menu items. McDonald's serves customers through company-operated restaurants and franchised locations, and it supports sales via dine-in, drive-thru, digital ordering platforms and third-party delivery partnerships.

Founded in 1940 by brothers Richard and Maurice McDonald as a single San Bernardino, California restaurant, the business was transformed into a franchising model after Ray Kroc joined in the mid-1950s and led the brand's national and international expansion.

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