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McDonald's

MCD · NYSE

Franchised revenue costs 15.5%, owned restaurants cost 84.7%

Occupancy took 15.5% of $4.4B franchised revenue, while running owned restaurants consumed 84.7% of their $2.5B sales, so profit follows franchising.

Q2 FY2026, the quarter to Jun 30, 2026 · 10-Q filed Aug 7, 2026

Q2 FY2026 · revenue
$7.1B+3.7% on the year
Operating margin
47.0%
Net income
$2.4B
Free cash flow, quarter
$2.0B

Largest source of revenue: International Operated Markets, 50.8% of the total.

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Where McDonald's's money goes

Tap the picture to explore the flow: levels, scale, every line and its figures.
Key insights · Q2 FY2026
  1. 01

    Franchised revenue costs 15.5%, owned restaurants cost 84.7%

    Occupancy took 15.5% of $4.4B franchised revenue, while running owned restaurants consumed 84.7% of their $2.5B sales, so profit follows franchising.

    Why it matters

    Revenues from franchised restaurants were $4,393 million, 61.9% of total revenues of $7,099 million. The main cost tied to them, franchised restaurants-occupancy expenses for the land and buildings the company owns or leases, was $680 million, or 15.5% of franchised revenues. Conventional franchisees pay rent and royalties based on a percent of sales, with specified minimum rent payments.1

    Company-operated sales were $2,525 million, 35.6% of revenue, from 2,012 restaurants. Their restaurant expenses, covering food, paper, payroll and occupancy, were $2,138 million, or 84.7% of those sales, against 84.5% a year earlier. The filing attributes the pressure on U.S. company-operated margins to ongoing inflationary costs.1

    AnalysisAnalysis: this contrast, more than restaurant-level efficiency, is what produces an operating margin close to half of revenue. A dollar of franchisee sales reaches McDonald's as rent and royalty, with the food and labor already paid for by the operator. The filing keeps the owned fleet for other reasons: training, testing products and pricing, and credibility as a franchisor.

  2. 02

    The U.S. grows slowest but earns the widest margin

    U.S. revenue rose 1.7%, the slowest of three segments, yet 55.6% of it became operating income, against 47.8% in International Operated Markets.

    Why it matters

    The U.S. Market produced $2,827 million of revenue, 39.8% of the total, and $1,573 million of operating income, 47.1% of the total. International Operated Markets produced $3,603 million of revenue, 50.8% of the total, and $1,723 million of operating income, 51.6%. U.S. revenue rose 1.7%, against 4.1% for International Operated Markets.1

    International Developmental Licensed Markets and Corporate grew fastest, up 11.5% to $669 million, 9.4% of revenue, but contributed $42 million of operating income, 1.3% of the total. Corporate overhead is reported in this segment, and the filing names higher selling, general and administrative expenses there as the offset to operating income growth.1

    AnalysisAnalysis: the filing says segment contributions to margin differ mainly because of the mix of franchised and company-operated restaurants, and International Operated Markets run more of their own restaurants, with the food and labor costs that come with them. The low profit in the licensed segment mostly reflects where corporate costs are booked, which the segment table cannot fully separate. The practical point: the segment growing slowest carries nearly half of operating income.

  3. 03

    Overhead grew 18.7% while revenue grew 3.7%

    Other selling, general and administrative expense rose to $706M from $595M, so operating income grew 3.3%, slower than revenue, and margin slipped 0.21 points.

    Why it matters

    Other selling, general and administrative expense rose 18.7% to $706 million, reaching 9.95% of revenue, up 1.25 points. The filing names higher employee costs, including incentive-based compensation, and the costs of the Worldwide Owner/Operator convention.1

    A swing in other operating items softened the effect: a net $37 million of other operating income, against a net $29 million expense a year earlier. The filing attributes it partly to more sales of restaurants to franchisees in the International Operated Markets and higher gains on sales of excess property. Operating income rose 3.3% to $3,338 million and operating margin eased to 47.0%.1

    AnalysisAnalysis: part of the increase looks periodic and part looks lasting. A convention does not happen every year; incentive pay and technology costs tend to stay. Gains on selling restaurants and property are not a steady income source either, so the quarter's operating income leaned on items that may not repeat at the same size.

    Management measures overhead against Systemwide sales, which include franchisee sales the company does not record as revenue, so its own ratio reads far smaller than the share of revenue shown here.1

  4. 04

    Rising capital spending has held free cash flow flat

    Over four years, annual capital spending rose from $2.0B to $3.4B, so free cash flow stayed near $7.1B to $7.2B while operating cash grew.

    Why it matters

    In the latest full year, cash from operations was $10,551 million and capital expenditures $3,365 million, leaving free cash flow of $7,186 million. Four years earlier the figures were $9.1 billion, $2.0 billion and $7.1 billion. Capital spending took 31.9% of operating cash, against 22.3%. Net income rose to $8,563 million from $7.5 billion over the same span, so free cash flow now covers a smaller share of reported profit.1

    The quarter fits the pattern. Capital expenditures were $831 million against $744 million a year earlier, 11.7% of revenue. Free cash flow recovered to $1,976 million from $1,254 million, 83.7% of net income, because cash from operations rose to $2,807 million from $1,998 million; the filing attributes the first-half increase to favorable working capital changes and improved operating results.1

    The filing says the majority of this year's capital spending is directed toward new restaurant units across the U.S. and International Operated Markets, where under conventional franchising the company generally owns or secures a long-term lease on the land and building.1

    AnalysisAnalysis: this complicates the asset-light label. In the markets it operates, McDonald's builds and holds the real estate, so unit growth there consumes cash before it earns rent. Whether the extra spending lifts free cash flow later depends on new restaurants ramping toward system averages.

Sources

  1. 1.McDonald's 10-Q for the period to 2026-06-30 (the filing), Aug 7, 2026, read Nov 1, 2026

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Business performance

Growth, profit and margin

Revenue went from $22.8B in FY2007 to $26.9B in FY2025, the operating margin from 17.0% to 46.1%, over 18 years.

  • Revenue$26.9B
  • Operating income$12.4B
  • Operating margin46.1%
Period
Q2 FY2026
Revenue
$7.1B
Operating income
$3.3B
Operating margin
47.0%
Net income
$2.4B
Free cash flow
$2.0B
Business performance

Does the profit turn into cash?

Q2 FY2026: free cash flow of $2.0B against net income of $2.4B in the quarter.

  • Operating cash flow$10.6B
  • Capital expenditure$3.4B
  • Free cash flow$7.2B
  • Net income$8.6B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Segments

Segment Information (Revenues and Operating Income by Segment) (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
90.4%
Source10-Q, Derived from Total revenues and Franchised restaurants-occupancy expenses in the 10-Q filed 2026-08-07
Operating margin
47.0%
Source10-Q, Derived from Operating income and Total revenues in the 10-Q filed 2026-08-07
Net margin
33.3%
Source10-Q, Derived from Net income and Total revenues in the 10-Q filed 2026-08-07
Free cash flow, quarter
$2.0B
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-07
Free cash flow margin, quarter
27.8%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-07
Cash conversion, quarter
1.19x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-07
Capital spending, quarter
11.7%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-07
Revenue growth
+3.7%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Segments

International Operated Markets$3.6B50.8%
U.S. Market$2.8B39.8%
International Developmental Licensed Markets and Corporate$669.0M9.4%

Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-08-07

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

The filing's cost lines could not be read beneath operating income.

Operating income by segment

Where the operating profit is earned, as the filing reports it.

Segments

International Operated Markets$1.7B51.6%
U.S. Market$1.6B47.1%
International Developmental Licensed Markets and Corporate$42.0M1.3%

Shares of operating income. Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-07

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

Company-owned and operated restaurants
2,012 restaurants
As of Jun 30, 2026
View source
Company-owned and operated 2,012 2,054
Franchised restaurants
44,016 restaurants
As of Jun 30, 2026
View source
Total Franchised 44,016 42,059
Global comparable sales growth (quarter)
1.3%
As of Jun 30, 2026
View source
Global comparable sales increased 1.3% for the quarter and 2.5% for the six months.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
International Developmental Licensed Markets comparable sales growth (quarter)
1.9%
As of Jun 30, 2026
View source
International Developmental Licensed Markets comparable sales increased 1.9% for the quarter and 2.6% for the six months.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
International Operated Markets comparable sales growth (quarter)
1.5%
As of Jun 30, 2026
View source
International Operated Markets comparable sales increased 1.5% for the quarter and 2.6% for the six months.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
Markets with loyalty programs
70 markets
As of Jun 30, 2026
View source
Systemwide sales to loyalty members are measured across 70 markets with loyalty programs.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
Restaurants
46,028 restaurants
As of Jun 30, 2026
View source
Of the 46,028 McDonald's restaurants at June 30, 2026, approximately 95% were franchised.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
Systemwide sales growth (quarter)
5.0%
As of Jun 30, 2026
View source
Systemwide sales increased 5% (4% in constant currencies) for the quarter and 8% (5% in constant currencies) for the six months.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026
U.S. comparable sales growth (quarter)
0.8%
As of Jun 30, 2026
View source
U.S. comparable sales increased 0.8% for the quarter and 2.3% for the six months.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 7, 2026

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement22 lines, as presented in the 10-Q
LineQ2 FY2026A year earlierChangeOf revenueSource
Revenues
Revenues from franchised restaurants$4.39B$4.21B+4.3%61.9%Source10-Q, mcd:Revenuesfromfranchisedrestaurants, as reported in the 10-Q filed 2026-08-07
Sales by Company-owned and operated restaurants$2.53B$2.46B+2.7%35.6%Source10-Q, mcd:SalesByCompanyOwnedAndOperatedRestaurants, as reported in the 10-Q filed 2026-08-07
Other Revenues$182.0M$172.0M+5.8%2.6%Source10-Q, mcd:OtherRevenues, as reported in the 10-Q filed 2026-08-07
Total revenues$7.10B$6.84B+3.7%100%Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-08-07
Operating costs and expenses
Company-operated restaurant expenses$2.14B$2.08B+2.9%30.1%Source10-Q, mcd:CompanyOperatedRestaurantExpenses, as reported in the 10-Q filed 2026-08-07
Franchised restaurants-occupancy expenses$680.0M$654.0M+4.0%9.6%Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-08-07
Other Restaurant Expenses$163.0M$149.0M+9.4%2.3%Source10-Q, us-gaap:OtherExpenses, as reported in the 10-Q filed 2026-08-07
Selling, general & administrative expenses
Depreciation and Amortization$111.0M$106.0M+4.7%1.6%Source10-Q, us-gaap:DepreciationDepletionAndAmortization, as reported in the 10-Q filed 2026-08-07
Other Selling, General and Administrative Expense$706.0M$595.0M+19%9.9%Source10-Q, us-gaap:OtherSellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-08-07
Operating costs and expenses
Other operating (income) expense, net (shown as a deduction)($37.0M)-$29.0M0.5%Source10-Q, us-gaap:OtherOperatingIncomeExpenseNet, as reported in the 10-Q filed 2026-08-07
Total operating costs and expenses$3.76B$3.61B+4.1%53.0%Source10-Q, us-gaap:CostsAndExpenses, as reported in the 10-Q filed 2026-08-07
Income Statement
Operating income$3.34B$3.23B+3.3%47.0%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-07
Interest expense$409.0M$390.0M+4.9%5.8%Source10-Q, us-gaap:InterestExpense, as reported in the 10-Q filed 2026-08-07
Nonoperating (income) expense, net-$6.0M-$18.0M-67%0.1%Source10-Q, us-gaap:NonoperatingIncomeExpense, as reported in the 10-Q filed 2026-08-07
Income before provision for income taxes$2.94B$2.86B+2.6%41.4%Source10-Q, mcd:IncomeLossFromContinuingOperationsBeforeIncomeTaxes, as reported in the 10-Q filed 2026-08-07
Provision for income taxes$574.0M$608.0M-5.6%8.1%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-08-07
Net income$2.36B$2.25B+4.8%33.3%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-08-07
Earnings per common share-basic$3$3+5.7%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-08-07
Earnings per common share-diluted$3$3+5.7%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-08-07
Dividends declared per common share$2$2+5.1%0.0%Source10-Q, us-gaap:CommonStockDividendsPerShareDeclared, as reported in the 10-Q filed 2026-08-07
Weighted average shares outstanding-basic709.1714.5-0.8%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-08-07
Weighted average shares outstanding-diluted711.1717.6-0.9%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-08-07
Cash flow statement25 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ2 FY2026A year earlierChangeSource
Operating activities
Net income$2.36B$2.25B+4.8%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-08-07
Charges and credits:
Depreciation and amortization$565.0M$544.0M+3.9%Source10-Q, us-gaap:DepreciationAndAmortization, as reported in the 10-Q filed 2026-08-07
Deferred income taxes-$58.0M-$41.0M+41%Source10-Q, us-gaap:DeferredIncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-08-07
Share-based compensation$39.0M$44.0M-11%Source10-Q, us-gaap:ShareBasedCompensation, as reported in the 10-Q filed 2026-08-07
Other (shown as a deduction)($51.0M)$71.0M-28%Source10-Q, us-gaap:OtherNoncashIncomeExpense, as reported in the 10-Q filed 2026-08-07
Adjustments to reconcile to cash provided by operations
Changes in working capital items (shown as a deduction)($50.0M)$731.0M-93%Source10-Q, us-gaap:IncreaseDecreaseInOperatingCapital, as reported in the 10-Q filed 2026-08-07
Operating activities
Cash provided by (used for) operations$2.81B$2.00B+40%Source10-Q, us-gaap:NetCashProvidedByUsedInOperatingActivities, as reported in the 10-Q filed 2026-08-07
Investing activities
Capital expenditures (shown as a deduction)($831.0M)$744.0M+12%Source10-Q, us-gaap:PaymentsToAcquirePropertyPlantAndEquipment, as reported in the 10-Q filed 2026-08-07
Purchases of restaurant businesses (shown as a deduction)($74.0M)$56.0M+32%Source10-Q, us-gaap:PaymentsToAcquireOtherProductiveAssets, as reported in the 10-Q filed 2026-08-07
Sales of restaurant businesses$137.0M$34.0M+303%Source10-Q, us-gaap:ProceedsFromSaleOfOtherProductiveAssets, as reported in the 10-Q filed 2026-08-07
Sales of property$21.0M$11.0M+91%Source10-Q, us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment, as reported in the 10-Q filed 2026-08-07
Other (shown as a deduction)($121.0M)$114.0M+6.1%Source10-Q, us-gaap:PaymentsForProceedsFromOtherInvestingActivities, as reported in the 10-Q filed 2026-08-07
Cash used for investing activities-$868.0M-$869.0M-0.1%Source10-Q, us-gaap:NetCashProvidedByUsedInInvestingActivities, as reported in the 10-Q filed 2026-08-07
Financing activities
Net short-term borrowings$492.0M$597.0M-18%Source10-Q, us-gaap:ProceedsFromRepaymentsOfShortTermDebt, as reported in the 10-Q filed 2026-08-07
Long-term financing issuances$0$1.40BSource10-Q, us-gaap:ProceedsFromIssuanceOfLongTermDebt, as reported in the 10-Q filed 2026-08-07
Long-term financing repayments (shown as a deduction)($580.0M)$700.0M-17%Source10-Q, us-gaap:RepaymentsOfLongTermDebt, as reported in the 10-Q filed 2026-08-07
Treasury stock purchases (shown as a deduction)($856.0M)$505.0M+70%Source10-Q, us-gaap:PaymentsForRepurchaseOfCommonStock, as reported in the 10-Q filed 2026-08-07
Common stock dividends (shown as a deduction)($1.32B)$1.27B+4.1%Source10-Q, us-gaap:PaymentsOfDividendsCommonStock, as reported in the 10-Q filed 2026-08-07
Proceeds from stock option exercises$14.0M$41.0M-66%Source10-Q, us-gaap:ProceedsFromStockOptionsExercised, as reported in the 10-Q filed 2026-08-07
Other-$140.0M-$126.0M+11%Source10-Q, us-gaap:ProceedsFromPaymentsForOtherFinancingActivities, as reported in the 10-Q filed 2026-08-07
Cash provided by (used for) financing activities-$2.39B-$555.0M+330%Source10-Q, us-gaap:NetCashProvidedByUsedInFinancingActivities, as reported in the 10-Q filed 2026-08-07
Statement of Cash Flows
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents$99.0M$65.0M+52%Source10-Q, us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-07
Cash and equivalents increase (decrease)-$348.0M$638.0MSource10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect, as reported in the 10-Q filed 2026-08-07
Cash and equivalents at beginning of period$1.17BSource10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-07
Cash and equivalents at end of period$822.0M$1.88B-56%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-07
Balance sheet35 lines, as presented in the 10-Q
LineQ2 FY2026A year earlierChangeSource
Current assets
Cash and equivalents$822.0MSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-08-07
Accounts and notes receivable$2.49BSource10-Q, us-gaap:AccountsNotesAndLoansReceivableNetCurrent, as reported in the 10-Q filed 2026-08-07
Inventories, at cost, not in excess of market$58.0MSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-08-07
Prepaid expenses and other current assets$980.0MSource10-Q, us-gaap:PrepaidExpenseAndOtherAssetsCurrent, as reported in the 10-Q filed 2026-08-07
Total current assets$4.35BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-08-07
Other assets
Investments in and advances to affiliates$2.90BSource10-Q, us-gaap:InvestmentsInAffiliatesSubsidiariesAssociatesAndJointVentures, as reported in the 10-Q filed 2026-08-07
Goodwill$3.35BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-08-07
Miscellaneous$6.39BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-08-07
Total other assets$12.64BSource10-Q, mcd:TotalOtherAssets, as reported in the 10-Q filed 2026-08-07
Assets
Lease right-of-use asset, net$14.46BSource10-Q, us-gaap:OperatingLeaseRightOfUseAsset, as reported in the 10-Q filed 2026-08-07
Property and equipment
Property and equipment, at cost$49.94BSource10-Q, us-gaap:PropertyPlantAndEquipmentGross, as reported in the 10-Q filed 2026-08-07
Accumulated depreciation and amortization (shown as a deduction)($21.46B)Source10-Q, us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment, as reported in the 10-Q filed 2026-08-07
Net property and equipment$28.48BSource10-Q, us-gaap:PropertyPlantAndEquipmentNet, as reported in the 10-Q filed 2026-08-07
Assets
Total assets$59.92BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-08-07
Current liabilities
Accounts payable$1.11BSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-08-07
Lease liability$690.0MSource10-Q, us-gaap:OperatingLeaseLiabilityCurrent, as reported in the 10-Q filed 2026-08-07
Income taxes$327.0MSource10-Q, us-gaap:AccruedIncomeTaxesCurrent, as reported in the 10-Q filed 2026-08-07
Other taxes$261.0MSource10-Q, us-gaap:AccrualForTaxesOtherThanIncomeTaxesCurrent, as reported in the 10-Q filed 2026-08-07
Accrued interest$428.0MSource10-Q, us-gaap:InterestPayableCurrent, as reported in the 10-Q filed 2026-08-07
Accrued payroll and other liabilities$1.20BSource10-Q, mcd:AccruedExpensesAndOtherCurrentLiabilities, as reported in the 10-Q filed 2026-08-07
Total current liabilities$4.02BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-08-07
Liabilities and shareholders' equity
Long-term debt$39.86BSource10-Q, us-gaap:LongTermDebtNoncurrent, as reported in the 10-Q filed 2026-08-07
Long-term lease liability$14.04BSource10-Q, us-gaap:OperatingLeaseLiabilityNoncurrent, as reported in the 10-Q filed 2026-08-07
Long-term income taxes$176.0MSource10-Q, us-gaap:AccruedIncomeTaxesNoncurrent, as reported in the 10-Q filed 2026-08-07
Deferred revenues - initial franchise fees$946.0MSource10-Q, us-gaap:DeferredRevenueNoncurrent, as reported in the 10-Q filed 2026-08-07
Other long-term liabilities$677.0MSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-08-07
Deferred income taxes$1.22BSource10-Q, us-gaap:DeferredIncomeTaxLiabilitiesNet, as reported in the 10-Q filed 2026-08-07
Shareholders' equity (deficit)
Preferred stock, no par value; authorized—165.0 million shares; issued—none$0Source10-Q, us-gaap:PreferredStockValue, as reported in the 10-Q filed 2026-08-07
Common stock, $0.01 par value; authorized—3.5 billion shares; issued—1,660.6 million shares$17.0MSource10-Q, us-gaap:CommonStockValue, as reported in the 10-Q filed 2026-08-07
Additional paid-in capital$9.84BSource10-Q, us-gaap:AdditionalPaidInCapital, as reported in the 10-Q filed 2026-08-07
Retained earnings$71.99BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-08-07
Accumulated other comprehensive income (loss)-$2.34BSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-08-07
Common stock in treasury, at cost; 953.0 and 950.0 million shares (shown as a deduction)($80.53B)Source10-Q, us-gaap:TreasuryStockValue, as reported in the 10-Q filed 2026-08-07
Total shareholders' equity (deficit)-$1.02B-$2.76B-63%Source10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-08-07
Liabilities and shareholders' equity
Total liabilities and shareholders' equity (deficit)$59.92BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-08-07

About this data

Source
McDonald's 10-Q, accession 0000063908-26-000073, filed Aug 7, 2026, read on Nov 1, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-01
Edge and risks

What holds McDonald's's model up, and what could bend it

Competitive edge

  • Fees track sales, so higher checks still pay

    Rent and royalties are a percent of franchisee sales, so franchised revenues rose to $4.4B from $4.2B though U.S. guest counts fell.

    The detail

    Conventional franchisees pay rent and royalties based upon a percent of sales, with specified minimum rent payments, which the filing describes as designed to generate stable and predictable revenue. Revenues from franchised restaurants were $4,393 million, against $4,213 million a year earlier. U.S. comparable sales rose 0.8%, driven by check growth and favorable product mix, partly offset by negative comparable guest counts.1

    AnalysisAnalysis: the company's take is set on the operator's top line, not its profit, and the minimum rent puts a floor under it. Price and mix therefore reach McDonald's in full even when traffic softens, while the cost of fewer guests falls first on franchisees.

  • Partners carry the capital for most new restaurants

    Restaurants rose to 46,028 from 44,113 while company-operated units fell to 2,012 from 2,054, so franchisees and licensees carried all the net growth.

    The detail

    Franchised restaurants rose to 44,016 from 42,059, 95.6% of the system. Under a developmental license or affiliate arrangement, the licensee provides the capital, including the real estate interest, and the company generally invests no restaurant capital while collecting a royalty on sales. The filing expects developmental licensees and affiliates to fund most of this year's openings.1

    International Developmental Licensed Markets and Corporate revenue rose 11.5% to $669 million, the fastest of the three segments.1

    AnalysisAnalysis: growth in licensed markets adds royalty income without matching growth in the company's own assets, which is how the brand scales into markets it does not finance.

  • Contractual fees turn into steady shareholder cash

    Free cash flow was 27.8% of revenue, and the dividend declared rose to $1.86 from $1.77 while diluted shares fell to 711.1 million.

    The detail

    The filing sets out the order of priorities: invest in growth, prioritize the dividend, then repurchase shares with remaining free cash flow over time. Diluted shares were 711.1 million against 717.6 million a year earlier, and diluted earnings per share rose to $3.32 from $3.14.1

    AnalysisAnalysis: a rent and royalty stream tied to tens of thousands of operators' sales is steady enough to plan distributions against. The same predictability lets the company borrow to fund part of its returns, which is why the interest bill sits among the risks.

What to watch

  • U.S. growth rests on bigger checks, fewer guests

    U.S. comparable sales rose 0.8% against 2.5% a year earlier, with higher checks offsetting negative guest counts, a pattern that leans on pricing power.

    The detail

    Global comparable sales rose 1.3%, against 3.8% in the same quarter a year earlier, while Systemwide sales rose 5% with 46,028 restaurants against 44,113. The filing warns that pricing, promotional and value plans may be less successful than competitors' and cost sales, guest counts and market share, and names weight-loss medications and changing dietary guidelines among forces that can shift consumer behavior.1

    AnalysisAnalysis: the U.S. supplies nearly half of operating income, so its traffic matters more than any other single market's. Higher prices keep fees rising for a while, but operators absorb the cost of fewer visits, and the new strategy's menu and value work is aimed at bringing guests back.

  • Franchisee profitability is the model's quiet constraint

    Owned restaurants spent 84.7% of sales on running costs against 84.5% a year earlier, a squeeze the filing ties to inflation that franchisees also face.

    The detail

    The filing names its own model as a risk: franchised revenues are largely dependent on franchisees' ability to grow their sales, and its plans depend on franchisees being willing and able to fund major initiatives, which turns on their access to financing at reasonable rates. Labor costs and wage laws are named as pressures on both company-operated margins and franchisee profitability.1

    Litigation or regulation treating the company as responsible for franchisees for employment law or other purposes could, in the filing's words, challenge its franchise business model and create liability for their actions.1

    AnalysisAnalysis: the owned fleet is a window on what operators face. If franchisee margins tighten while guest counts are negative, their willingness to fund remodels, technology and value promotions becomes the limit on the system's plans.

  • A rising interest bill sits under the fee stream

    Interest expense rose 4.9% to $409M, equal to 12.3% of operating income, and the filing attributes the rise mainly to higher average rates.

    The detail

    Interest expense was $409 million against $390 million a year earlier, 12.3% of operating income of $3,338 million against 12.1% of $3,232 million. The balance sheet shows a shareholders' deficit, and the filing warns that a lower credit rating or higher funding costs would raise interest expense and reduce flexibility.1

    AnalysisAnalysis: the structure works while fee income stays predictable. A lasting fall in franchisee sales would meet a fixed interest bill rather than a flexible one, which is the trade-off behind returning cash partly on borrowed money.

Sources

  1. 1.McDonald's 10-Q for the period to 2026-06-30 (the filing), Aug 7, 2026, read Nov 1, 2026
Go deeper

McDonald's, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What McDonald's's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What the fee stream depends on if guests keep slipping

    How rent, royalties and minimum rents behave when traffic softens, which franchisee pressures would show first, and what the overhead and capital plans quietly assume.

  • Is the restaurant build-out paying its way?

    What the step-up in capital spending buys, how new restaurants would have to perform to lift free cash flow, and where partner-funded growth fits in.

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Questions to start with
  • Why do McDonald's franchise fees keep rising when U.S. comparable guest counts are falling?
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  • What is driving McDonald's capital spending up, and how could new restaurants change its free cash flow?

Business Lens describes McDonald's from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.