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MCDONALDS CORP (MCD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered modest top-line growth and broad-based comps, but EPS came in below consensus as higher tax and stepped-up U.S. value marketing weighed on profitability. Global comparable sales rose 3.6% with growth across U.S. (+2.4%), IOM (+4.3%), and IDL (+4.7%) .
  • Revenue was $7.08B and adjusted EPS was $3.22; against S&P Global consensus, revenue was essentially in-line while adjusted EPS missed. GAAP EPS was $3.18, up 2% YoY; adjusted EPS was flat YoY amid a higher effective tax rate and $40M incremental U.S. marketing spend to relaunch Extra Value Meals .
  • Systemwide sales increased 8% (+6% constant currency), loyalty-driven Systemwide sales were ~$9B in the quarter (TTM ~$34B), and total restaurant margin dollars surpassed ~$4.0B for the first time .
  • Management tightened the FY effective tax rate to 21–22% (from prior 20–22%) and reiterated mid-to-high 40% operating margin guidance; Q4 FX is expected to be a ~$0.05 tailwind to EPS. The Board raised the quarterly dividend 5% to $1.86 (49th consecutive annual increase) .

What Went Well and What Went Wrong

What Went Well

  • Global comps grew 3.6% with all segments positive; Systemwide sales +8% (+6% cc), reflecting unit growth and broad-based demand. “We increased global Systemwide sales by 6% and grew comp sales across all segments” – CEO Chris Kempczinski .
  • Restaurant margins exceeded $4B for the first time; adjusted operating margin YTD 47.2% vs. 46.7% prior year, underscoring franchise model strength .
  • International momentum: Germany delivered strongest comp results in two years and continued share gains; Australia posted share gains again with value price locks and menu innovation .

What Went Wrong

  • EPS headwind from a higher tax rate (22.8% in Q3) and stepped-up SG&A (including ~$40M incremental U.S. marketing for EVM relaunch), diluting adjusted EPS despite operating income growth .
  • U.S. McOpCo margins contracted; 2.4% U.S. comps were insufficient to offset inflation in wages and food & paper, with beef inflation particularly elevated .
  • Ongoing bifurcation in U.S. consumer: lower-income QSR traffic declined high single-to-double digits; management remains cautious on consumer health into 2026 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenues ($USD Millions)$6,873 $6,843 $7,078
Operating Income ($USD Millions)$3,188 $3,232 $3,357
Net Income ($USD Millions)$2,255 $2,253 $2,278
Diluted EPS (GAAP) ($)$3.13 $3.14 $3.18
Diluted EPS (Non-GAAP) ($)$3.23 $3.19 $3.22
Operating Margin %Q3 2024Q3 2025
GAAP Operating Margin %45.3% 46.5%
Non-GAAP Operating Margin %—47.2% (YTD)
Comparable Sales (Constant Currency)Q3 2024Q3 2025
U.S.+0.3% +2.4%
International Operated Markets (IOM)(2.1%) +4.3%
Intl. Developmental Licensed Markets (IDL)(3.5%) +4.7%
Total Company(1.5%) +3.6%
Segment Revenue Detail ($USD Millions)Q3 2024Q3 2025
Franchised Revenues – U.S.$1,851 $1,906
Franchised Revenues – IOM$1,781 $1,962
Franchised Revenues – IDL & Corporate$461 $496
Company-Owned Sales – U.S.$822 $790
Company-Owned Sales – IOM$1,485 $1,645
Company-Owned Sales – IDL & Corporate$349 $128
Other Revenues$124 $151
Total Revenues$6,873 $7,078
KPIsQ3 2025
Systemwide Sales Growth – U.S.+3% (+3% cc)
Systemwide Sales Growth – IOM+11% (+6% cc)
Systemwide Sales Growth – IDL+11% (+10% cc)
Franchised Sales ($USD Millions) – Total$34,093
Total Restaurant Margin Dollars ($USD Millions)$4,088
Systemwide Sales to Loyalty Members (Quarter)>$9B
Systemwide Sales to Loyalty Members (TTM)~$34B

Actual vs. Consensus (S&P Global) – Q3 2025

MetricActualConsensus
Revenue ($USD)$7,078,000,000 $7,089,478,980*
Adjusted/Primary EPS ($)$3.22 $3.33195*
EBITDA ($USD)$3,879,000,000*$3,929,309,170*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY 202520–22% (Q2 call) 21–22% (tightened) Raised lower bound
Operating Margin % (Adj.)FY 2025Mid-to-high 40% (target) Mid-to-high 40% (reiterated) Maintained
SG&A as % of Systemwide SalesFY 2025~2.2% ~2.2% Maintained
Interest Expense GrowthFY 2025~4% (low end of prior 4–6%) ~4% Maintained
FX Tailwind to EPSQ4 2025~$0.15 for FY (Q2 est.) ~$0.05 in Q4 Lower near-term tailwind
Capital ExpendituresFY 2025Not specified Q2$3.0–$3.2B New detail
Gross OpeningsFY 2025~2,200 (reiterated roadmap) ~2,200 Maintained
Net AddsFY 2025~1,800 ~1,800 Maintained
FCF ConversionFY 2025Not specified Q2Low-to-mid 80% New detail
Dividend (Quarterly)As declared$1.77 (prior) $1.86 (5% increase) Raised

Earnings Call Themes & Trends

TopicQ1 2025 (Prev Mentions)Q2 2025Q3 2025Trend
Value & AffordabilityGlobal comps -1.0%; U.S. -3.6%; macro uncertainty EDAP/meal bundles in IOM; $5 Meal & McValue incrementality; Snack Wraps $2.99 EVM relaunch; $40M marketing; broader value on menu board; U.S. co-investment through Q1’26 Strengthening/Scaling
Beverage Initiatives—CosMc’s learnings; 500-store test (cold coffee, refreshers, energy) Test exceeding expectations; disciplined pricing vs competition Expanding tests
Chicken Category—Share gains; launches: McCrispy strips, Snack Wraps; Chicken Big Mac (DE), McWings (AU) Continued U.S. chicken share gains; value pairing for Snack Wraps Positive momentum
Supply Chain / Beef Inflation—Elevated cost pressures, esp. Europe beef +20% Beef inflation “very, very high”; basket low-to-mid single-digit inflation Persistent headwind
Digital / Loyalty—Edge computing rollout; 185M 90-day active loyalty users globally; Ready on Arrival ~45M 90-day actives in U.S.; Monopoly campaign as major digital acquisition Scaling engagement
China / Japan—China macro challenged; 1,000 openings targeted; Japan strong China comps positive amid delivery pricing pressure; share gains; Japan leads IDL Mixed macro; share gains
Breakfast Daypart—Industry weakness; sensitivity to macro; national breakfast advertising Breakfast remains under pressure; holding share Under pressure
Macro/Tariffs—Caution on consumer; tariffs included in targets Consumer pressures to persist into 2026; cautious outlook Continued caution

Management Commentary

  • “We increased global Systemwide sales by 6% and grew comp sales across all segments” – Chris Kempczinski (CEO) .
  • “Adjusted EPS declined 1% in constant currency primarily due to a higher effective tax rate… [and] $40 million of incremental marketing spend to support the relaunch of Extra Value Meals in the US” – Ian Borden (CFO) .
  • “We actually expect our U.S. comp sales growth will accelerate in Q4 versus the 2.4% that we delivered in Q3… lapping last year’s food safety incident; Monopoly and EVM rehits support” – CFO .
  • “We are providing a co-investment from the launch in September through the end of 2025 at 50% of the effective menu price reduction… ~$15M in September, ~$75M in Q4” – CFO on EVM support .
  • “Beef prices… very, very high… inflation proving sticky” – CEO .

Q&A Highlights

  • U.S. value strategy: Company co-investing 50% of EVM discount (raised from ~11% to minimum 15%) through end-2025; support shifts in Q1’26 to cover 50% of net negative cash flow, then ends post-Q1’26, expecting program sustainability thereafter .
  • Beverage test: 500-store regional pilots with positive consumer response; operational complexity manageable; pricing positioned competitively to deliver value and margin accretion .
  • Comps trajectory: Management expects U.S. comp sales to accelerate in Q4 on Monopoly and EVM; international comps could decelerate sequentially due to tough laps but accelerate on two-year stacks .
  • Margin drivers: U.S. company-operated margin contraction driven by insufficient top-line vs. inflation; basket inflation low-to-mid single digits, beef especially elevated .
  • Consumer bifurcation persists: Low-income traffic down high single-to-double digits; high-income traffic up; value foundational across cohorts .

Estimates Context

  • Against S&P Global consensus, adjusted/primary EPS missed ($3.22 actual vs $3.33195* consensus), and revenue was essentially in-line ($7.078B actual vs $7.089B* consensus). EBITDA came below consensus ($3.879B* actual vs $3.929B* consensus). Drivers include higher effective tax rate and incremental SG&A tied to U.S. value marketing .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS miss driven by tax rate and stepped-up U.S. value investment; underlying operating income up and restaurant margins strong, reinforcing franchise-led durability .
  • U.S. value architecture is being reset (EVM relaunch, national price points), with corporate co-investment bridging franchisees to sustainable economics; watch Q4 U.S. comp acceleration catalysts (Monopoly, EVM) .
  • International strength (Germany, Australia, Japan) continues; China positive comps amid price pressure from delivery competition; unit growth remains robust (target ~2,200 opens, ~1,800 net adds in 2025) .
  • Cost inflation—especially beef—remains a headwind; management reiterates disciplined pricing and value focus; adjusted operating margin target maintained in mid-to-high 40% .
  • Digital flywheel expanding: U.S. ~45M 90-day active users; Monopoly is a large digital acquisition event; loyalty sales TTM ~$34B; this should support frequency over time .
  • Capital returns intact: Quarterly dividend raised 5% to $1.86 (49-year streak); continued buybacks alongside growth investments .
  • Near-term trading: Look for Q4 narrative pivot on U.S. comps acceleration and beverage test updates; medium-term thesis hinges on value execution, international momentum, unit growth, and digital-driven frequency .