McDonald's earnings: third quarter 2026

The quarter in brief

McDonald's made more profit in the third quarter of 2026 even though its sales barely grew. Revenue rose just 1% to $7,157 million, while operating profit, the profit from running the business before interest and tax, rose 7% to $3,595 million.¹ Earnings per share, which is net income divided by the number of shares, came to $3.51, up 10%. On the company's own adjusted measure, which leaves out restructuring costs, it rose 11% to $3.57.¹

Restaurants outside the U.S. carried the growth. In the U.S., its biggest market, sales at restaurants open at least a year slipped slightly. A large part of the profit rise came from selling company-run restaurants to franchisees rather than from selling more food.¹

The figures, as the company printed them

Against what analysts expected

Analysts had expected adjusted earnings per share of $3.36 on average.² Its adjusted figure of $3.57 came in about 6% higher than that.¹ The reported figure of $3.51, which includes restructuring costs, was also above the forecast.¹

What the company expects

On profitability, nothing changed. For 2026 McDonald's kept its forecast for operating margin, the share of sales left as operating profit, in the mid-to-high 40% range. That is the same wording it used three months ago.¹³ The third quarter's adjusted operating margin of 48.3%, up from 47.2% a year earlier, sits at the upper end of that band.¹

The building plans did change. It now expects to open about 2,500 restaurants worldwide in 2026, down from about 2,600 forecast three months ago. Of these, about 700 will be in the U.S. and its large company-run international markets, down from about 750. Licensees and affiliates are now put at about 1,800 openings, where before it said more than 1,800.¹³ It now expects to spend about $3.7 billion on building and equipping restaurants. Three months ago it had forecast $3.7 billion to $3.9 billion, so the figure now sits at the bottom of that range.¹³

The longer view held. McDonald's still expects about 2,100 net new restaurants this year, adding about 2.5% to sales growth. It still aims for 50,000 restaurants worldwide by the end of 2028.¹

Costs and cash forecasts were left as they were. It expects interest expense to rise 4% to 6%, mainly on higher interest rates, and a tax rate of 21% to 23%. Over nine months interest was up 4% and the tax rate was 21.2%, both inside those ranges.¹ It expects overhead of about 2.2% of systemwide sales, meaning all sales at its restaurants, franchised ones included. Overhead ran at 2.1% over nine months, so meeting that forecast implies slightly higher spending in the final quarter.¹ It also expects to turn profit into free cash flow, the cash left after running and investing in the business, at a rate in the low-to-mid 80% range.¹

The strong points

Profit per share grew faster than profit itself. Adjusted earnings per share grew faster than net income, which rose 9%.¹ Part of the gap came from buybacks, the company purchasing its own shares, which cut the average number of shares by about 1% to 708.3 million. McDonald's spent $519 million on buybacks in the quarter. It also raised its quarterly dividend 4% to $1.93 a share.¹ For a company valued partly for steady payouts, profit growth backed by cash returned to owners matters.

Abroad, the business grew. In its large company-run international markets, most countries had higher sales at existing restaurants, led by Germany and Australia, with France a drag.¹ In the markets run by licensees these sales rose 4.2%, led by Japan, and every region was up. That helped lift company-wide growth at existing restaurants to 1.5% despite the U.S.¹ It shows McDonald's does not depend on one market to keep growing.

The core of the business kept growing. What McDonald's earns from franchisees in rent and royalties, after its own costs on those restaurants, rose 3% to $3,800 million.¹ Franchisees run about 95% of its restaurants. This income is the most predictable part of the company, and its growth shows the franchise model holding up while the restaurants McDonald's runs itself struggle.¹

The weak points

The U.S. went backwards. Sales at U.S. restaurants open at least a year fell 0.2%, against growth of 2.4% a year earlier.¹ Management says things improved later in the quarter after it pushed lower-priced offers.¹ Still, this is the company's biggest market, and a slip there weighs on everything else.

Much of the profit rise did not come from selling food. Operating profit rose by $239 million, but $102 million of that, about 43%, came from other operating income. Gains on selling restaurants to franchisees rose to $97 million from $35 million.¹ Sales of restaurants are not something McDonald's can count on every quarter, so this part of the growth is less dependable than rent and royalties.

Its own U.S. restaurants are under strain. Sales at company-run restaurants fell 3% to $2,480 million.¹ In the U.S., what those restaurants kept after food, staff and running costs fell 16%, to $75 million from $90 million, as costs kept rising.¹ Weaker visits and higher costs are hitting the same market.

Against our analysis

Our analysis of McDonald's watched for analysts to start raising their forecasts for its profits. The quarter gives them reasons to go either way: a result above what they expected and an unchanged profit forecast on one side, and fewer planned openings and a smaller building budget on the other.¹²³

What to watch

The question is whether American customers come back now that McDonald's is pushing low prices. Several signals will move before the company reports again.

The first is spending at restaurants. The U.S. Census Bureau publishes monthly retail sales figures that include food services and drinking places. If that spending firms up and franchisees report more visits, lower prices are drawing people in. If spending stays flat and franchisees describe discounts squeezing them without filling seats, the U.S. slip has further to run.

The second is costs. Beef prices and wages hit the restaurants McDonald's runs itself directly. Rising costs combined with flat visits would point to further falls in profit at its own U.S. restaurants. Steady costs combined with recovering visits would point the other way.

The third is the size of the gains on selling restaurants to franchisees in the next quarter. If those gains shrink and operating profit still grows, the business itself is doing the work; if profit growth fades with them, it was leaning on them. The next results will be the next check on that.

Our verdict on the quarter

In all, a strong report. Profit per share grew faster than profit and came in above what analysts expected, and McDonald's kept its profit forecast for the year.¹² Franchise income and international growth did the lifting.¹ Holding it back: the slip in U.S. sales, the fact that much of the profit rise came from selling restaurants rather than food, and the trimmed building plans.¹³

Notes

1. McDonald's results release, 4 November 2026: sec.gov. ↩
2. Nasdaq's earnings calendar, 4 November 2026. ↩
3. McDonald's previous results release, 4 August 2026: sec.gov. ↩

Our full analysis of McDonald's: https://marketmedals.com/companies/mcdonald-s.html