McDonald's Q3 Earnings Call Highlights

Key Points

• U.S. comparable sales improved to positive in September after declining earlier in the quarter, but fell 0.2% for Q3 overall. Management said it is not forecasting a fourth-quarter improvement over that result.
• McDonald’s is testing low-priced bundles at about 1,900 U.S. restaurants, while franchisees have introduced similar offers elsewhere; the company will evaluate sales impact, customer uptake, operational feasibility and franchisee economics. Restored digital promotions also initially exceeded expectations for incremental visits and sales.
• Global comparable sales rose 1.5% and adjusted EPS increased 11% year over year in constant currency to $3.57. McDonald’s lowered its 2026 gross restaurant-opening target to 2,500 from 2,600, while maintaining its outlook for about 2,100 net openings.

McDonald's NYSE: MCD said U.S. comparable sales turned positive in September after declines earlier in the third quarter, as the company restored digital promotions and shifted marketing toward established value offerings. The chain is now testing additional low-priced bundles ahead of a planned national launch in early 2027.

Global comparable sales rose 1.5% in the third quarter of 2026, while U.S. comparable sales fell 0.2% for the full period. Global systemwide sales increased 4% in constant currency, reflecting a growing contribution from new restaurants.

Chairman and CEO Chris Kempczinski said the company was encouraged by baseline traffic trends in September and October but had more work to do to improve U.S. performance. Chief Financial Officer Ian Borden cautioned that the company was not forecasting fourth-quarter U.S. comparable sales would improve from the third-quarter level.

Value Tests and Digital Offers

McDonald's began an eight-week test of two entry-level menu approaches in about 1,900 U.S. restaurants. One offers mix-and-match bundles, while the other features fixed combinations. Franchisees representing approximately 4,000 additional restaurants have independently moved ahead with similar bundles, bringing participation across the two groups to more than 40% of the U.S. system.

Kempczinski said McDonald's will assess the tests based on incremental sales, customer take rates, operational feasibility and franchisee economics. He said it was too early to share results after the first week.

The CEO described entry-level offerings as the missing piece in the company's U.S. value lineup, particularly for lower-income consumers. McDonald's also offers $5 and $6 meal deals and Extra Value Meals, which Borden said have helped generate incremental traffic and higher average checks.

The company partially restored regional and national digital offers during the quarter, including a $2 breakfast sandwich and free fries with a $1 minimum purchase. Borden said the initial response exceeded expectations for incremental guest counts and sales. Loyalty members account for nearly 30% of the U.S. customer base, he said.

International Performance and Earnings

Comparable sales rose 1.4% in the International Operated Markets segment, led by Australia and Germany, and increased 4.2% in International Developmental Licensed Markets. Japan led the latter segment and recorded its 44th consecutive quarter of comparable sales growth.

Borden said results in France remained below expectations, while the escalation of the war in Ukraine affected restaurant operating hours. Kempczinski said the company expected the effects of external issues in both markets to continue into the fourth quarter. He also said franchisees in France had supported changes to the market's governance structure intended to improve flexibility.

China's results tempered growth in the developmental licensed segment amid a challenging consumer environment. Kempczinski said third-party delivery providers had pulled back on subsidies in China, negatively affecting traffic across the market and at McDonald's.

Adjusted earnings were $3.57 per share, including a $0.01 currency translation headwind. Adjusted earnings per share increased 11% in constant currency from a year earlier. McDonald's generated nearly $4.2 billion in restaurant margins, and its year-to-date adjusted operating margin was 48.3%.

Beverages, Chicken and Restaurant Investments

McDonald's specialty beverage platform continued to drive incremental sales, according to executives. In the U.S., checks including a specialty beverage were about 50% higher than the average full-day check, and most beverage units were sold after lunch.

The platform is operating in nearly 18,000 restaurants across the U.S., Germany, Canada and Australia. McDonald's expects to expand it to more than 7,000 additional European restaurants by mid-2027 and is targeting an additional 1.5 percentage points of beverage market share by 2030.

The company is also preparing hand-breaded chicken pilots in the U.S. and Ireland. It plans advertised sales tests in about 100 U.S. restaurants and a national rollout in Ireland in early 2027. Kempczinski said early testing in roughly 10 Irish restaurants showed strong incremental demand for wings, though the company was still evaluating operational complexity.

McDonald's now expects 2,500 gross restaurant openings worldwide in 2026, down from its prior target of 2,600, while maintaining its expectation for approximately 2,100 net openings. It expects capital spending of about $3.7 billion, at the low end of its previous $3.7 billion to $3.9 billion range.

The company has refranchised about 175 restaurants in the U.S. and International Operated Markets this year as it works toward having 98% of its global portfolio franchised by the end of 2028. Borden said he expected a similar level of refranchising activity over the next couple of years.

About McDonald's (NYSE:MCD)

McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.

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