McDonald’s outlines 4% unit growth and over 250M loyalty user target as it advances digital strategy

Earnings Call Insights: McDonald’s Corporation (MCD) Q2 2025

Management View

• Christopher J. Kempczinski, Chairman, President & CEO, highlighted “global system-wide sales growth of over 6% in constant currency and global comparable sales growth of nearly 4%” for the quarter, noting that McDonald’s continued to achieve positive comparable guest counts globally despite industry challenges.
• Kempczinski emphasized that “the power of McDonald’s value and affordability platforms, exciting marketing and menu offerings and world-class execution are working together to drive comparable sales results and guest count growth as we also accelerate new restaurant development.”
• He reported strong international performance, stating “all of our big 5 IOM markets now have both meal bundles and everyday affordable price or EDAP menus in place” and cited record sales for new product introductions like the Chicken Big Mac in Germany.
• In the U.S., Kempczinski said “comp sales were up 2.5% in the quarter” and discussed ongoing efforts to reengage low-income consumers and bolster value perceptions through offerings such as the $5 Meal Deal, McValue platform, and the national relaunch of Snack Wraps at $2.99.
• Kempczinski shared updates on digital and technology advancements, including a partnership with Google for edge computing and a goal to reach “250 million 90-day active loyalty users by the end of 2027,” noting progress to “more than 185 million 90-day active users across 60 loyalty markets.”
• Ian Frederick Borden, Executive VP & Global CFO, stated, “Our financial results in the quarter were largely in line with our expectations. Global comparable sales increased 3.8% with comp sales growth up sequentially from the first quarter’s low point.”
• Borden added that “Adjusted earnings per share were $3.19 for the quarter, an increase of about 5% versus the prior year quarter in constant currencies. Adjusted operating margin was nearly 47% for the first half of the year.”

Outlook

• Borden reaffirmed, “we continue to target a full year adjusted operating margin in the mid- to high 40% range and above the 46.3% adjusted operating margin in 2024.”
• He stated, “we’re adjusting our full year margin target for company-operated restaurants to be around the 14.8% that we delivered in 2024, which we had previously targeted to increase slightly.”
• The company “remains on pace to open approximately 2,200 restaurants globally this year” and expects “slightly over 4% unit growth from the nearly 1,800 net restaurant additions in 2025.”
• Borden maintained the interest expense outlook: “projecting our full year interest expense to increase by about 4% compared to 2024… at the low end of our previous estimate of 4% to 6%.”

Financial Results

• Borden reported “Adjusted earnings per share were $3.19 for the quarter.”
• He indicated “top line results generated nearly $4 billion of restaurant margin for the quarter… driven primarily by franchise margin performance.”
• The CFO further noted, “Adjusted operating margin was nearly 47% for the first half of the year.”
• Borden highlighted franchise-led growth and disciplined cost management, especially as cost pressures rose in Europe.

Q&A

• David Palmer, Evercore: Asked about U.S. value and affordability scores and consumer perception. Kempczinski responded that value scores are strong among loyalty members and McValue users but acknowledged “the single biggest driver of what shapes a consumer’s overall perception of McDonald’s value is the menu board.”
• Dennis Geiger, UBS: Inquired about U.S. sales trajectory and momentum. Borden explained, “the industry environment certainly remains challenging,” but leadership is confident about “the lineup of kind of marketing and menu activities that we’ve got planned in the U.S. business for the rest of the year.”
• David Tarantino, Baird: Sought clarity on IOM segment drivers. Borden pointed to the foundation of value and affordability, complemented by “really strong execution on menu and marketing across our key IOM markets.”
• Brian Harbour, Morgan Stanley: Asked about tech initiative success. Kempczinski noted progress with loyalty and digital platforms, while company and restaurant platform benefits are expected to materialize over the next couple of years.
• Sara Senatore, Bank of America: Asked about middle-income consumer trends and loyalty program impact. Kempczinski answered, “the middle income has improved in Q2 versus Q1… loyalty program is just not big enough yet.”
• John Ivankoe, JPMorgan: Asked about persistent weakness in the low-income segment. Kempczinski attributed it to “real incomes are down with the low-income consumer” and increased anxiety, while Borden confirmed similar trends internationally.
• Jon Tower, Citi: Questioned G&A trends and beverage strategy. Borden explained G&A is “pretty typical, but probably a little bit more kind of back half weighted this year,” while Kempczinski described beverages as a “really large market opportunity” with both value and premium potential.
• Lauren Silberman, Deutsche Bank: Asked about franchisee alignment on national price points. Kempczinski acknowledged the challenge but said, “we have good alignment with the franchisees on the need and the power of doing nationally advertised price points.”
• Christine Cho, Goldman Sachs: Inquired about factors impacting the development pipeline. Borden said, “we continue to see solid starting points for new restaurants,” and Kempczinski reported, “our pipelines are in really good shape.”

Sentiment Analysis

• Analysts pressed management on persistent value perception challenges, U.S. sales momentum, and the impact of economic pressures on different consumer cohorts. The tone was neutral to slightly negative, with analysts seeking clarity on execution and the sustainability of recent successes.
• Management maintained a confident tone in prepared remarks, with Borden asserting, “we remain confident in our ability to drive long-term profitable growth for the system and to create value for our shareholders.” During Q&A, management provided detailed responses but acknowledged challenges, particularly concerning low-income consumers.
• Compared to last quarter, analysts’ tone remains cautious while management continues to express confidence, though with increased emphasis on the difficulties facing lower-income segments and the importance of value initiatives.

Quarter-over-Quarter Comparison

• Guidance continues to target mid- to high 40% operating margin, but the margin target for company-operated restaurants was adjusted to “around the 14.8% that we delivered in 2024.”
• Management continues to highlight the importance of value and affordability, with more explicit discussion this quarter about the challenges in the U.S. related to low-income consumers and menu board pricing.
• Analysts’ focus shifted from initial value platform implementation to the effectiveness and reach of these initiatives, as well as franchisee engagement and the digital strategy’s progress.
• Management tone remains confident but increasingly acknowledges the headwinds from consumer economic pressures, especially in the U.S. and Europe.
• Key metric changes include sequential improvement in global comp sales and guest counts, increased adjusted EPS and restaurant margin, and reaffirmed full-year targets for restaurant openings and loyalty user growth.

Risks and Concerns

• Management cited continued high inflation in Europe, especially in beef prices, and persistent pressure on low-income consumers in the U.S. as key challenges.
• Kempczinski stated, “reengaging the low-income consumer is critical as they typically visit our restaurants more frequently than middle- and high-income consumers.”
• Borden acknowledged “cost pressures in some markets, most notably in Europe, have become more challenging.”
• Franchisee alignment on national price points and maintaining balance between value leadership and profitability were discussed as ongoing concerns.

Final Takeaway

Management emphasized that McDonald’s is executing on its Accelerating the Arches strategy by driving value and affordability, expanding digital engagement, and pursuing over 4% global unit growth this year. While the outlook remains positive with margin and growth targets reaffirmed, the company continues to navigate inflationary pressures and a bifurcated consumer landscape, particularly in the U.S., by focusing on value innovation, digital loyalty, and collaborative franchisee relationships.

Read the full Earnings Call Transcript