McDonald's lays out $8.5 billion franchisee support plan, targets higher margins by 2030

By Reuters News

Sept 23 (Reuters) - McDonald's MCD.N on Wednesday outlined about $8.5 billion in support for franchisees as part of an expanded growth plan and set targets for margin and market share growth as it looks to revive sales momentum after several muted quarters.

The new goals come shortly after it blamed execution missteps in winning back lower-income consumers in an uncertain economy for weaker-than-expected U.S. sales growth in the second quarter.

Ahead of its investor meeting later in the day, the company said the franchisee support investments will be over the next decade through 2036. It also set targets for restaurant productivity as well as for operating margin in the low- to mid-50% range by 2030.

The company's turnaround effort in the U.S. is getting a renewed push under industry veteran Skye Anderson, who was named president of its U.S. business last month.

Announced in June, McDonald's "NEXT" strategy aims to improve food quality, hospitality, value and innovation, with executives on Wednesday providing the first detailed roadmap for the plan.

The plan also includes simplifying operations, modernizing restaurant designs, investing in employee training and expanding the use of ArchIQ, its AI-powered restaurant operating system that automates tasks such as drive-thru ordering.

McDonald's expects the plan to improve restaurant efficiency by 250 basis points, generating about $100,000 in additional annual cash flow for the average U.S. restaurant.

The company said that of the $8.5 billion, roughly $5 billion will be invested by 2030 through a combination of rent relief and capital support for franchisees.

The burger chain also expects restaurant expansion to contribute about 2.5% of systemwide sales growth in 2027 and around 2% by 2030.

It also set a goal of gaining 1.5 percentage points of market share in chicken products globally by 2030 as rising beef prices boost demand for chicken.

Shares of the company, down nearly 18% so far this year, were up about 1% in early trading

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.