McDonald's outlines $8.5 billion plan to support franchisees

By Reuters News

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

Launched in June, McDonald's "NEXT" strategy focuses on improving food quality, hospitality, value and innovation to boost growth.

Persistent inflation and fierce competition over value offerings have pressured McDonald's and other fast-food chains, contributing to slower sales growth in the U.S. and international markets.

Last month, McDonald's missed estimates for second-quarter U.S. sales growth, citing execution missteps that hindered efforts to win back lower-income consumers who had cut back on dining out.

McDonald's also named industry veteran and company insider Skye Anderson as president of its U.S. business to help drive its turnaround strategy.

Ahead of its investor day, McDonald's said it would invest about $8.5 billion in its NEXT strategy through 2036, including roughly $5 billion by 2030, through rent relief and capital support for franchisees.

McDonald's said its estimated 250-basis-point efficiency gain would add about $100,000 in annual cash flow for the average U.S. restaurant, with franchisees expected to recoup the investment in about four years.

The burger chain targets unit expansion to contribute nearly 2.5% to systemwide sales growth in 2027 and about 2% by 2030, with operating margins expected in the low- to mid-50% range by 2030. The company's total adjusted operating margin for fiscal 2025 was 46.9%.

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