McDonald’s aggressive expansion plans are targeting 1,800 new restaurant openings in 2025. This initiative combines effectively with continued digital transformation investments which position McDonald’s for sustained growth.
The corporation’s franchising model provides exceptional scalability and profit generation. That’s a big reason why earnings grew 7.4% recently.
Meanwhile, the stock trades at 24.8 times the company’s forward earnings forecast. We feel that’s a reasonable premium for predictable earnings, global market leadership, and a consistent dividend growth track record.
MCDONALD’S CORP. (New York symbol MCD; www.mcdonalds.com) is the world’s largest fast-food chain with over 44,000 restaurants in 119 countries. It serves a wide variety of food but is best known for its hamburgers and french fries.
Under its “asset light” business model, McDonald’s is responsible for buying the land and then building the restaurants. It also supplies the food and pays for advertising and marketing.
In exchange, franchisees pay an initial fee to McDonald’s, as well as ongoing rental and royalty payments based on a percentage of their sales. They are also responsible for occupancy costs, such as property taxes and maintenance. Franchisees operate about 95% of the company’s outlets. Their payments supply about 60% of the company’s total revenue.
McDonald’s has three main divisions: The U.S. Market (41% of revenue); International Operated Markets (49%), which focuses on developed countries outside of the U.S., including Canada, Australia, the U.K., France, Germany, Italy, the Netherlands, and Spain; and International Developmental Licensed Markets (10%), mainly developing countries.
Thanks to new price-promotions and menu items, McDonald’s revenue in the three months ended June 30, 2025, rose 5.4%, to $6.84 billion from $6.49 billion a year earlier. That beat the consensus forecast of $6.70 billion.
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Overall same-store sales improved 3.8%. That’s due to gains at all three of its divisions: up 2.5% at the U.S. stores; up 4.0% at International Operated Markets (Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the U.K.); and up 5.6% at International Developmental Licensed Markets (mainly outlets in China, Japan, the Middle East and all remaining markets).
McDonald’s earnings before unusual items also gained 7.4%, to $3.19 a share (or a total of $2.29 billion) from $2.97 a share (or $2.15 billion). That topped the consensus estimate of $3.15 a share.
Aggressive expansion targets 1,800 new restaurants
The company continues to focus on its three-part “M-C-D” growth plan: 1) Maximize our Marketing involves advertising and promotions that emphasize its well-known brand and the value of its food; 2) Commit to the Core aims to build on its main menu items: burgers, chicken products and coffee; and 3) Double Down on the 4Ds. Those are Digital, which involves expanding its online ordering systems; Delivery services; Drive-Thru lanes; and Development, which involves opening new outlets.
For all of 2025, McDonald’s is planning to open 1,800 restaurants (net of closures) worldwide. Those new outlets, along with upgrades to its existing locations, will cost between $3.0 billion and $3.5 billion. The company aims to expand its store count to over 50,000 by the end of 2027.
Another area of growth for McDonald’s is its customer loyalty plan. Those 175 million users tend to order more often and spend more per order. The company aims to increase its loyalty plan to 250 million users before 2028.
McDonald’s also aims to boost its efficiency with artificial intelligence (AI). It’s now upgrading 43,000 of its stores with AI applications that can take drive-thru orders and co-ordinate kitchens. That will help cut down on incorrect orders and food waste.
As well, McDonald’s has teamed up with Google Cloud to let restaurant operators process and analyze real-time data. That helps them better manage their inventories and anticipate equipment failures.
The stock trades at a reasonable 24.8 times the $12.29 a share it’s forecast to make in 2025.
McDonald’s has raised its annual dividend rate each year since 1976. The last increase came in December 2024 when your quarterly payment increased 6.0%, to $1.77 a share from $1.67. The new annual rate of $7.08 yields 2.3%. McDonald’s dividend has grown an average 7.2% annually over the past 5 years. Its TSI Dividend Sustainability Rating is Highest.
Recommendation in Wall Street Stock Forecaster: McDonald’s Corp. is a buy.
