McDonald`s Corp
Q1 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.74%.
Did MCD Beat Earnings? Q1 2025 Results
McDonald's served up a disappointing first quarter, missing on both top and bottom lines as weakening consumer traffic — particularly among low- and middle-income customers — weighed heavily on results. Non-GAAP diluted EPS came in at $2.67, essentially in line with the $2.6706 consensus but technically a 0.02% miss, while revenue fell 3.5% year-over-year to $5.96 billion, trailing expectations of $6.13 billion by 2.78%. The U.S. was the sharpest pain point, with comparable sales tumbling 3.6% as negative guest counts marked a stark reversal from the 2.5% growth posted in Q1 2024 — a reversal that a partnership setback with a major doughnut chain also underscored the fragility of the broader QSR traffic environment. Foreign currency translation created an additional $114 million headwind. Despite the pressure, operating margin edged up to 44.5%, and the company reaffirmed its full-year outlook, projecting mid-to-high 40% operating margins and roughly 1,800 net new restaurant additions in 2025, signaling confidence in its long-term expansion despite near-term headwinds.
- U.S. comparable sales decline of 3.6% driven by negative comparable guest counts
- International Operated Markets comparable sales decline of 1.0%, primarily impacted by negative comparable sales in the U.K.
- International Developmental Licensed Markets comparable sales increase of 3.5%, primarily driven by Middle East and Japan
- Leap Day comparison in prior year negatively impacted all segments
- Foreign currency translation negatively impacted results, primarily driven by the weakening of the Euro against the U.S. Dollar
- Lower Franchised and Company-owned and operated margins
- Ongoing inflationary cost pressures in U.S. and International Operated Markets
- SG&A expenses decreased 5% due to timing of digital and technology investments and prior year convention costs
- Higher equity in earnings in China due to improved operating performance and increased ownership in Grand Foods Holding
- War in the Middle East continued to negatively impact Systemwide sales and revenue
- Systemwide sales to loyalty members of approximately $8 billion for the quarter across 60 markets
“McDonald's has a 70-year legacy of innovation, leadership, and proven agility, all of which give us confidence in our ability to navigate even the toughest of market conditions and gain market share. Consumers today are grappling with uncertainty, but they can always count on McDonald's for both exciting new menu items and delicious favorites for exceptional value, from a brand they love.”
McDonald's CEO, on the earnings call
Forward Guidance & Outlook
McDonald's expects net restaurant unit expansion to contribute slightly over 2% to 2025 Systemwide sales growth in constant currencies. Full year 2025 SG&A expenses are expected at about 2.2% of Systemwide sales. The 2025 operating margin percent is expected to be in the mid-to-high 40% range. Interest expense for full year 2025 is expected to increase between 4% and 6% driven by higher average debt balances and higher average interest rates. The effective income tax rate for full year 2025 is expected to be between 20% and 22%. Capital expenditures are expected between $3.0 and $3.2 billion, with the majority directed towards new restaurant unit expansion. The company expects to open approximately 2,200 restaurants globally (about 600 in U.S. and International Operated Markets, about 1,600 by developmental licensees and affiliates), targeting nearly 1,800 net restaurant additions in 2025. Free cash flow conversion rate is expected in the low-to-mid 80% range.
MCD YoY Financials
MCD Revenue by Segment
MCD Revenue by Geography
Figures from SEC filings and company reports. Not investment advice.