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MCDONALDS CORP (MCD)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid top-line and margin performance: revenues rose 5% to $6.843B, GAAP diluted EPS increased 12% to $3.14, and operating income grew 11% to $3.232B, with non-GAAP EPS at $3.19 (+7%) after excluding $0.05/share restructuring charges .
  • Results were broad-based: global comparable sales +3.8% (U.S. +2.5%, IOM +4.0%, IDL +5.6) and Systemwide sales +8% (+6% ex-FX), supported by value platforms, menu innovation (Snack Wraps, Chicken Big Mac), and a large global Minecraft campaign .
  • Against S&P Global consensus, MCD posted a modest beat: revenue $6.843B vs. $6.699B*, Primary EPS $3.19 vs. $3.146*, and EBITDA $3.806B vs. $3.725B*; management also raised the FX tailwind to ~$0.15 on adjusted EPS and lowered interest expense outlook to ~4% .
  • Guidance maintained for full-year adjusted operating margin in the mid-to-high 40% range and capex $3.0–$3.2B; company-operated margin target was trimmed back to ~14.8% (in line with 2024), with ~2,200 gross openings still on track (nearly 1,800 net adds) .
  • Near-term U.S. traffic remains challenged, particularly among low-income consumers; catalysts include $2.99 Snack Wraps, continued value architecture work (core menu pricing), and specialty beverage tests (~500 stores) .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based comp growth: Total +3.8%, U.S. +2.5%, IOM +4.0% (all markets positive), IDL +5.6% (led by Japan) .
    • Margin resilience and disciplined cost: operating margin 45.9% and non-GAAP operating margin expansion helped by sales-driven franchise margins and lower SG&A in IDL & Corporate .
    • Strategic marketing and menu execution: Minecraft global campaign boosted guest counts; Chicken Big Mac set records in Germany; Snack Wraps launched at $2.99 with franchisee-supported national pricing .
    • Quote: “Our 6% global Systemwide sales growth this quarter is a testament to the power of compelling value, standout marketing, and menu innovation...” — CEO Chris Kempczinski .

  • What Went Wrong

    • U.S. industry traffic softness: continued double-digit visit declines among low-income consumers; breakfast daypart notably weak given economic sensitivity .
    • Company-operated margins under pressure: management reset the full-year company-operated restaurant margin target to ~14.8% (vs. prior expectation of a slight increase) amid cost inflation (notably Europe) .
    • IDL & Corporate revenue decline YoY: impacted by the prior-year sale of South Korea, partially offset by Israel acquisition and positive sales; Middle East war continues to weigh on sales and revenue .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$6.388 $5.956 $6.843
Operating Income ($USD Billions)$2.868 $2.648 $3.232
Net Income ($USD Billions)$2.017 $1.868 $2.253
Diluted EPS (GAAP, $USD)$2.80 $2.60 $3.14
Diluted EPS (Non-GAAP, $USD)$2.83 $2.67 $3.19
Comparable Sales (Total, %)0.4% -1.0% 3.8%

Q2 2025 vs. prior year and consensus

MetricQ2 2024Q2 2025 ActualQ2 2025 Consensus
Revenue ($USD Billions)$6.490 $6.843 $6.699*
Diluted EPS (GAAP, $USD)$2.80 $3.14 $3.146*
Diluted EPS (Non-GAAP, $USD)$2.97 $3.19 —
EBITDA ($USD Billions)$3.530*$3.806*$3.725*

Values marked with * retrieved from S&P Global.

Segment breakdown – revenues

SegmentQ2 2024 Total Franchised + Co-owned Sales ($USD Billions)Q2 2025 Total Franchised + Co-owned Sales ($USD Billions)
U.S.$2.651 $2.692
International Operated Markets$3.104 $3.404
International Developmental Licensed Markets & Corporate$0.645 $0.576
Other Revenues$0.089 $0.172
Total Revenues$6.490 $6.843

KPIs

KPIQ1 2025Q2 2025
Global Comparable Sales (%)-1.0% 3.8%
U.S. Comparable Sales (%)-3.6% 2.5%
IOM Comparable Sales (%)-1.0% 4.0%
IDL Comparable Sales (%)3.5% 5.6%
Systemwide Sales Growth (Total, %)(Q1) -1% (Q2) 8%
Systemwide Sales to Loyalty Members (TTM, $USD Billions)>$31 ~$33
Systemwide Sales to Loyalty Members (Quarter, $USD Billions)~$8 ~$9
Dividend per share (declared/paid during quarter)$1.77 $1.77
Share Repurchases (Quarter)1.5M sh / $447MM 1.7M sh / $506MM

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Net unit expansion contribution to Systemwide salesFY 2025Slightly over 2% Slightly over 2% Maintained
SG&A as % of Systemwide salesFY 2025~2.2% ~2.2% Maintained
Adjusted Operating Margin %FY 2025Mid-to-high 40% Mid-to-high 40% Maintained
Company-operated restaurant marginFY 2025Targeted to increase slightly (vs. 14.8% in 2024) ~14.8% (in line with 2024) Lowered
Interest expense YoYFY 2025+4% to +6% ~+4% Lowered
Effective tax rateFY 202520–22% 20–22% (quarterly volatility possible) Maintained
Capital expendituresFY 2025$3.0–$3.2B $3.0–$3.2B Maintained
Gross openings / Net addsFY 2025~2,200 / nearly ~1,800 ~2,200 / nearly ~1,800 Maintained
Free cash flow conversionFY 2025Low-to-mid 80% Low-to-mid 80% Maintained
FX tailwind to adjusted EPSFY 2025~$0.05 ~$0.15 Raised

Earnings Call Themes & Trends

TopicQ4 2024 (Previous)Q1 2025 (Previous)Q2 2025 (Current)Trend
Value architecture & pricingU.S. comps -1.4% amid average check decline; value remains focal point Global comps -1.0%; negative U.S. guest counts; EDAP progress internationally U.S. +2.5% comps; EDAP + bundles across big IOM markets; $2.99 Snack Wraps; $5 Meal Deal continues Improving sequentially; still work on U.S. core pricing
Digital & loyalty scale>175M 90-day actives at 2024 YE >31B TTM loyalty sales; app promotions >185M 90-day actives; ~$33B TTM loyalty sales; geofencing “Ready on Arrival” reduces wait times >50% Expanding user base and engagement
Menu innovationVarious country-specific initiatives Early 2025 value/mix shifts; set up for H2 Chicken Big Mac, Big Arch (FR/UK), McCrispy Strips, Snack Wraps launch; specialty beverage test (~500 stores) Strong activation; beverages next
Macro/tariffs & consumerMixed comps, higher costs FX headwinds; Middle East war impact; low-income pressure Low-income visits down double digits; breakfast weakest daypart; FX tailwind improved U.S. remains bifurcated; FX better
Technology & AIFoundation building Transformation programs, platform investments Edge computing with Google; AOI/IoT; automated order-taking pilots; GBS rollouts (finance/HR) Building capabilities; benefits skew to 2026+
Development pipeline—~2,200 openings plan On pace for ~2,200; pipelines in strong shape; ~1,000 China opens Accelerating in owned/IDL markets

Management Commentary

  • Strategic message: “When we make a commitment to value and affordability and couple that with world-class marketing and menu innovation, we can drive strong results” — CEO Chris Kempczinski .
  • Value & pricing: Management is working with U.S. franchisees on core menu pricing to strengthen perceived value; nationally advertised price points (e.g., $2.99 Snack Wraps) drive incrementality and have franchisee support .
  • Technology moat: Edge computing with Google powers AI/IoT-enabled restaurants; “Ready on Arrival” geofencing cuts pickup wait times >50%; modernization of finance/HR systems via Global Business Services underway .
  • International discipline: Amid input cost inflation (e.g., beef +~20% in Europe), franchisees maintain prudent pricing, sustaining value leadership and market share gains .

Q&A Highlights

  • U.S. consumer bifurcation persists: low-income visits down double digits; middle-income visits slightly positive; high-income growth continues; breakfast is the most economically sensitive and currently weakest daypart .
  • Specialty beverages: ~500-store test focused on crafted, full-margin offerings (cold coffee, refreshers, crafted soda, energy); learnings from CosMc’s suggest simplified “recipes” over custom builds .
  • Company-operated margin outlook: reset to ~14.8% for 2025 (flat vs. 2024), reflecting cost pressures; overall adjusted operating margin still targeted mid-to-high 40% .
  • FX and interest expense: FX tailwind to adjusted EPS raised to ~$0.15; interest expense outlook trimmed to ~+4% YoY (low end of prior +4–6%) .
  • Development: ~2,200 gross openings in 2025 (~1,800 net); pipelines for 2026+ remain strong; ~1,000 openings in China targeted .

Estimates Context

  • Q2 2025 beats vs. S&P Global consensus: revenue $6.843B vs. $6.699B*, Primary EPS $3.19 vs. $3.146*, EBITDA $3.806B vs. $3.725B*. Management’s stronger FX tailwind (~$0.15) and beverage/menu initiatives may support modest upward EPS revisions for H2, while company-operated margin reset tempers near-term margin expansion assumptions .
  • FY trajectories: consensus FY 2025 revenue ~$26.667B* and Primary EPS ~$12.137*; FY 2026 revenue ~$28.154B* and EPS ~$13.233*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential improvement and a clean beat: Q2 revenue/EPS/EBITDA exceeded consensus alongside comp acceleration in every segment; franchise margin strength remains the profit engine *.
  • U.S. traffic risk remains: core menu pricing and value architecture are key to re-engaging low-income consumers; watch national price point adoption and breakfast initiatives .
  • Beverage test could be a new leg of growth: specialty beverages offer full-margin potential and cross-daypart traffic; monitor expansion pace, attachment rates, and operational scalability .
  • Guidance steady with refined underpinnings: adjusted operating margin mid-to-high 40% maintained; company-operated margin reset to ~14.8%; interest expense view lowered to ~+4%; FX tailwind increased, likely EPS-accretive .
  • International momentum durable: EDAP + bundles, disciplined pricing, and category innovation (chicken, Big Arch) are driving share gains despite European input inflation .
  • Capital deployment intact: dividend ($1.77/share) and buybacks continued; capex supports ~2,200 openings and targeted ~1,800 net adds, underpinning >2% unit-driven Systemwide sales growth .
  • Near-term trading lens: stock narrative hinges on U.S. value execution and beverage test traction vs. persistent low-income pressure; international outperformance and FX tailwinds are supportive near term .

Values marked with * retrieved from S&P Global.