Hello, and welcome to McDonald's Fourth Quarter 2025 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. I would now like to turn the conference over to Mr. Dexter Congbalay, Vice President of Investor Relations for McDonald's Corporation. Mr. Congbalay, you may begin.

Good afternoon, everyone, and thank you for joining us. With me on the call today are Chairman and Chief Executive Officer, Chris Kempczinski; Chief Financial Officer, Ian Borden; and Chief Restaurant Experience Officer, Jill McDonald. As a reminder, the forward-looking statements in our earnings release and 8-K filing also apply to our comments on the call today. Both of those documents are available on our website as are reconciliations of any non-GAAP financial measures mentioned on today's call, along with their corresponding GAAP measures. Following prepared remarks this morning, we will take your questions. Please limit yourself to one question and then reenter the queue for any additional questions. Today's conference call is being webcast and is also being recorded for replay on our website. And now I'll turn it over to Chris.

Good afternoon, everyone, and thank you for joining us today. I want to start by recognizing the resilience and commitment of the McDonald's system. Our franchisees, suppliers, and employees showed up for our customers and supported communities to close the year with strong momentum and a solid foundation heading into 2026. In 2025, McDonald's delivered system-wide sales of nearly $140 billion, up 5.5% in constant currency for the full year. This reflects solid comp sales growth of more than 3% for the full year and over 5.5% in the fourth quarter with strong growth across all segments. Our system-wide sales growth also reflects the benefit of our accelerating pace of new restaurant openings. In 2025, we opened 2,275 restaurants on top of the more than 2,000 restaurants we opened in each of the prior two years. All while we've continued to see attractive returns from these new restaurants. Our pace of new store openings will accelerate further as we target approximately 2,600 gross restaurant openings in 2026, which keeps us on track to achieve 50,000 restaurants by the end of 2027. Despite a challenging industry backdrop, our system stayed agile throughout 2025 by concentrating on what we can control. As we look to 2026, success will again depend on going three for three: compelling value that brings customers in the door, breakthrough marketing that creates meaningful moments for our fans, and menu innovation that provides great tasting food for our customers. We believe this disciplined focus enables McDonald's to outperform in any environment. Let's start with value. We've listened to customers and adjusted along the way with a relentless focus on delivering leadership in value and affordability. And our efforts are working. In the U.S., we launched McValue at the start of the year, which drove immediate incrementality and then we relaunched extra value meals in September. As we've said before, we'll measure the success of our EVM program in two ways: through our ability to gain share of low-income traffic; and by improving value and affordability experience scores. I am pleased to say that our EVM performance in the fourth quarter is exactly where we had hoped to be at this point. Together with McValue and marketing, we gained share with low-income consumers in December, and we've seen a meaningful increase in our value and affordability scores. Predictably, as U.S. franchisees provided these stronger value offerings throughout the year, their cash flow grew versus the prior year. In our big five international operated markets, we've offered everyday affordable price options or EDAP and menu bundles since early 2025. As awareness for these programs has grown, we've seen value and affordability scores steadily improve throughout the year, which also tells us they're resonating with customers. As I've said before and I will say again, McDonald's is not going to get beat on value and affordability. It's in our DNA, and we will remain agile to respond as appropriate to a dynamic competitive landscape. That takes us to marketing. We once again activated in ways that reached far beyond our restaurants and into global culture in 2025. The Minecraft movie collaboration was our largest global campaign ever, bringing together two iconic fandoms across more than 100 markets and 37,000 restaurants. And most recently, The Grinch returned after first debuting in Canada in 2024. The campaign, which came to life in several markets in 2025, drove extraordinary excitement, sparking sellouts and becoming a true holiday moment for millions of families. With the inclusion of Grinch's themed collectible socks in many markets, we were the largest seller of socks in the world for nearly a week. We sold about 50 million pairs globally across the first few days of the campaign. Both record-setting programs show how uniquely positioned McDonald's is to tap into culture at massive scale, reinforcing the power of a One McDonald's way of marketing and our ability to share creative excellence across the system. The last element of our trifecta is menu innovation. We saw strong performance from the return of Snack Wraps in the U.S., the debut of McWings in Australia, and the introduction of the Big Arch in several markets, each resonating with different customer segments and bringing excitement to our menu. As we build what's next, we're grounding our work in a sharper focus on taste and quality, creating dishes that feel unmistakably McDonald's and resonate with customers around the world. There is so much exciting work happening in this space. In a few minutes, Jill McDonald, our Chief Restaurant Experience Officer, which includes leading the global category management teams, will share more of what's coming this year. I was recently in Australia and saw firsthand how they're going three for three with value, marketing, and menu to win. Our close partnership with franchisees is driving strong momentum in the market. It's proof of what happens when you hit the mark on all three, driving strong business momentum and market share gains. With that, I'll turn it over to Ian to talk through our 2025 results in more detail.

Thanks, Chris, and good afternoon, everyone. As Chris mentioned, I'm proud of what the McDonald's system accomplished amid a challenging year for the industry. In the fourth quarter, we delivered strong comp sales, revenue, and earnings growth while also driving improvements in overall customer satisfaction scores across our top 10 markets in aggregate. Specifically, in the fourth quarter, global comparable sales were up 5.7% with positive comparable guest counts. In the U.S., comp sales for the quarter were up 6.8%, which was above our expectations and was driven by positive check and guest count growth. While some of the performance is attributable to easier prior year comparisons, it largely reflects the success of value menu and marketing initiatives that supported steady improvement in our baseline momentum. Together, these drove the highest quarterly comparable guest count gap to near-end competitors in recent history and set a solid foundation for 2026. Two marketing initiatives contributed to our strong performance. First, we kicked off the fourth quarter with MONOPOLY, which resulted in one of our largest digital customer acquisition events ever. Today, we have about 46 million 90-day active users in our U.S. loyalty app. And during the MONOPOLY event, we saw nearly 500 million games played. Second, we closed out the quarter with the Grinch Meal, which set new sales records, including the highest single sales day in our history. Overall, for the entire campaign, we sold nearly as many Grinch meals as our highly successful 2025 Minecraft movie meal and 2024 collector cups promotions combined. The Grinch meal captured fans' attention, a true testament to the power of the McDonald's brand with the right marketing execution. In addition to these marketing events, as Chris mentioned, in early September, we relaunched extra value meals to address customer value perceptions of our core menu offerings. In the fourth quarter, we increasingly saw evidence that this was working as intended. In addition to the improving trends in low-income share and value and affordability experience scores, the program drove improvements in units sold for our top EVMs, supported by the nationally price pointed $5 sausage egg and cheese McGriddles meal and $8 10-piece Chicken McNuggets meal in November. The momentum has continued in January behind the support of the nationally price pointed $5 Sausage McMuffin with egg meal and $8 2 Snack Wrap meal, and we remain on track to achieve our targets for incremental traffic associated with the EVM relaunch. Turning to our international operated markets, comp sales were up 5.2% in the segment, marking a third consecutive quarter of comp growth above 4% despite the challenging industry backdrop. Strong execution in the U.K., Germany, and Australia drove performance with each market delivering comp sales growth in the mid- to high single digits. Momentum behind McDonald's U.K.'s turnaround continued in the fourth quarter with market share gains for the first time in over a year behind the execution of several exciting promotions. As in the U.S., the Grinch campaign also exceeded expectations and featured McShaker Fries and special edition socks. The Menu Heist campaign, which is the U.K.'s version of our popular Taste of the World promotion in other markets, showcased the global strength of the brand by offering customers a curated selection of international menu favorites at their local McDonald's restaurant. This promotion delivered sustained strong performance through its six-week run. And given the success we've seen in the U.K. and other markets, we plan to expand it to even more markets in 2026. Germany and Australia also went three for three on executing value, menu, and marketing initiatives, resulting in share gains in each market in the fourth quarter. Both markets leveraged solid foundations and value offerings and capitalized on strong marketing campaigns. Germany's strong performance reflected the annual return of the Big Rosti, a large-format burger as well as a Friends TV show themed marketing campaign that was similar to a successful promotion in Spain just over a year ago and which we also plan to expand to more international markets in 2026. And in Australia, the breakfast daypart drove performance through menu innovations such as Matcha lattes, the Brekkie Wrap, and McGriddles, while the highly successful Grinch promotion highlighted innovative menu offerings such as the Chicken Big Mac and McWings and a special hot cake syrup sauce. Finally, in our international developmental license markets, comp sales for the quarter were up 4.5%, led by Japan with all geographic regions reflecting comp sales growth. Japan's performance has been consistently strong all year. It was supported in the fourth quarter by the launch of the My McDonald's Rewards loyalty program, marking a significant milestone in our global digital strategy. In China, although the market continued to face macroeconomic pressures, we maintained share in the quarter. In addition, we opened more than 1,000 restaurants in 2025 and now have a presence in every province. Turning to the P&L, adjusted earnings per share was $3.12 for the quarter, which includes a $0.10 benefit from foreign currency translation. Adjusted earnings per share on a constant currency basis increased 7% versus the prior year quarter, reflecting sales-driven margin contribution. Our total adjusted operating margin for the full year was 46.9%, in line with our expectations and reflecting the strength of our business model and the resilience of our system. Total restaurant margin dollars were more than $15 billion for the year. As we look back on the full year, our capital expenditure spend was $3.4 billion, slightly above the high end of the range that we provided for the year as we invested more toward our future year development pipeline, setting us up for success as we continue to increase our pace of openings in our wholly owned markets. I'm proud of what McDonald's has been able to deliver in a challenging environment, and we believe that we are well positioned to deliver solid results in 2026. And with that, let me hand it over to Jill.

Thanks, Ian, and good afternoon, everyone. I'm pleased to be here today to share more about the work of our restaurant experience teams and preview what's coming in 2026. It's been nine months since we established the global restaurant experience team. And when we announced this change, we noted that it would be significant for two reasons. First, our new integrated structure sets us up to execute with greater pace, which means ideas can start showing up in our restaurants even sooner. We can develop and scale product innovations faster than ever before with menu, supply chain, and operations all in one team. And second, our new category structure with dedicated leaders for beef, beverages, and chicken would give us better accountability and a sharper line of sight into what it takes to win in each of these large and growing verticals. We know that while value remains important for customers, delivering great taste and quality are their top needs, and that's at the center of everything we're doing across the restaurant experience. With that context, let me share more on each of the three categories. Starting with beef. We've continued rolling out Best Burger, which is now in more than 85 markets and on track to deliver on our commitment to be in nearly all markets by the end of 2026. Best Burger is the key to hotter, juicier, and even tastier burgers, which improve customer satisfaction scores and streamline operations for restaurant crew. We also began to pilot Big Arch about 1.5 years ago, and it's shown strong traction across several markets. Customers are responding to this delicious, more satisfying burger that meets their demand for something heartier while still feeling distinctly McDonald's. Its strong performance helped it most recently earn a permanent spot on the U.K. menu, and we see potential to continue scaling this platform as we strengthen our position within this tier of the beef category. Now let's turn to beverages. We are excited about the global beverage opportunity of more than $100 billion. You can expect to see new offerings in the U.S. as well as select international markets in 2026. Designed to capture share of this large and fast-growing category, we're exploring energy, indulgent iced coffees, fruity refreshers, and crafted sodas. We're thrilled to launch our new U.S. beverage lineup later this year under the McCafe brand. It builds on a highly successful test that exceeded expectations in the fourth quarter across more than 500 U.S. restaurants. As we've said before, the new beverage offerings drove incremental occasions across different dayparts as well as higher average check, including strong results from our Red Bull collaboration, which we plan to continue building in both the U.S. and beyond. We're applying learnings from the U.S. test as we expand offerings across the system. Australia, for example, ran a small beverage test at the end of 2025 and adapted those insights by refining some of the recipes and tailoring some of the flavor profiles to meet local preferences. Lastly, chicken. Just as a reminder, this global category is two times the size of beef and faster growing. We grew our chicken category share across our top 10 markets in 2025 and believe we're well on our way to increasing our share by at least one percentage point by the end of 2026 versus where we were in December 2023. At the foundational level, we achieved our target of deploying the McCrispy Sandwich equity to nearly all major markets by the end of 2025. And on the innovation front, many of you have spotted something cooking at a few restaurants in the Chicago land area. We're in the early stages of testing new flavor combinations and new ways of cooking as we continue to explore great tasting recipes for customers to enjoy. While I've shared how speed and scale show up across the three menu categories, innovation at McDonald's doesn't stop there. The same disciplined approach is guiding the technology advancements coming to life in our restaurants, rounding out what it truly means to deliver the full McDonald's restaurant experience. The restaurant experience team is using these tests to learn quickly and apply those learnings to capabilities like voice ordering, shift management tools, and other AI-enabled tools and digital enhancements that help make running great restaurants easier and more enjoyable for both crew and customers. Taken together, these efforts reflect how we are continuously innovating and improving the full scope of the McDonald's experience, bringing forward even more delicious food, smarter operations, thoughtful design, and technology that meets customers and our restaurant teams where they are. It's all part of how we're modernizing the way McDonald's shows up every day. And now I'll turn it back over to Ian.

Thanks, Jill. As we look ahead to 2026, we remain confident in our strategy and our ability to outperform our competitors in any operating environment by focusing on what we can control and by leveraging our global scale and financial strength. We believe the underlying assumptions for our 2026 outlook are prudent and reflect our expectations that the QSR industry environments in the U.S. and across many markets will remain challenging. Should the environment improve beyond our expectations, we believe McDonald's is well positioned to benefit disproportionately relative to our competitors. We expect that net restaurant expansion in 2026, along with restaurants we opened in 2025, will contribute approximately 2.5% to system-wide sales growth. We expect our operating margin to be in the mid- to high 40% range and to expand from our 46.9% adjusted operating margin in 2025. We're targeting G&A as a percentage of system-wide sales for the full year to be about 2.2%, reflecting our ongoing investments in our strategic growth drivers like technology and digital and Global Business Services or GBS. These investments are designed to unlock efficiencies in running the business and to support long-term growth for our people and stakeholders. Below the operating line, we expect interest expense to increase between 4% to 6% from the prior year, primarily due to higher average interest rates and expect our full-year effective tax rate to be between 21% and 23% with some volatility quarter-to-quarter that may cause the quarterly rate to be outside the annual range. We expect foreign currency to be a full-year tailwind to 2026 EPS, totaling in the range of $0.20 to $0.30 based on current exchange rates. As always, this is directional guidance only as rates will likely change as we move through the remainder of the year. Turning to capital allocation. We're committed to maintaining financial discipline and creating value for our shareholders over the longer term. Our priorities remain unchanged. First, we look to invest in the business to drive growth, including capital expenditures to primarily support new restaurant openings as well as investments in technology, digital, and GBS. Second, we prioritize our dividend, which has increased in each of the last 49 years. And third, we repurchase shares with remaining free cash flow over time. With respect to restaurant development and capital expenditures, as Chris mentioned, we continue to accelerate our pace of new unit openings and remain on track to achieve our target of 50,000 restaurants by the end of 2027. In 2025, we exceeded our openings plan for the year with gross openings of about 2,275 restaurants and net openings of 1,880. And in 2026, we're targeting approximately 2,600 gross restaurant openings with about 750 of these in our U.S. and IOM segments. We expect to open more than 1,800 restaurants in our IDL segment, including about 1,000 in China. Overall, we anticipate about 4.5% unit growth from the approximately 2,100 net restaurant additions in 2026. We expect our capital expenditure spend to be between $3.7 billion and $3.9 billion this year, with the majority invested in new unit openings across our U.S. and IOM segments. This increase in CapEx versus the prior year of $3.4 billion is in line with the targeted increase of about $300 million to $500 million that we outlined at our December '23 Investor Day. Lastly, we're targeting our net income to free cash flow conversion rate in 2026 to be in the low to mid-80% range, which is in line with the 84% in 2025. And with that, let me hand it back over to Chris.

Thanks, Ian. As we close the books in 2025, it's only natural to reflect not just on the year that was, but on how far we've come since announcing Accelerating the Arches in November 2020 and expanding our ambitions in December 2023. We made bold commitments to grow our business. We've made great progress on our accelerator priorities, and we've become a fundamentally different company. You heard from Jill how that transformation is coming to life across the restaurant experience from food to operations, design, and technology. When we started this journey, from a company standpoint, we didn't have a global business services function. Today, we do. We didn't have a revenue growth management function. Now we do. We didn't have a standardized global tech stack. Today, we're close. The early benefits from these new capabilities give us a clear line of sight into how they'll unlock growth and productivity moving forward. Loyalty is another great example. In November 2020, the McDonald's loyalty app was just beginning to launch in the U.S. In 2023, we had about $20 billion in system-wide sales to loyalty members across 50 markets. In 2025, we almost doubled those sales with nearly 210 million 90-day active users across 70 markets. And we're on track to reach our target of 250 million 90-day active users by the end of 2027. This matters because we know that loyalty increases visit frequency and opens the door to new ways to engage with our fans, like multi-visit bonus games such as the Snack Wraps campaign in the U.S. or exclusive partnerships available only through the app. Another critical proof is the connection between the app and the deployment of Ready on Arrival in our top six markets. It's already driving faster service, reducing wait times, and improving customer satisfaction, and we expect those benefits to compound as adoption grows across the system. These touch points simply didn't exist a few years ago. When we execute, we know we can outperform the competition in any environment. What's clear is that we've earned the right to look forward. We're excited to share what's next with our system at our worldwide convention in Las Vegas in June, and we expect to share more details with all of you during an investor update sometime this fall. Stay tuned. Before we turn to your questions, I want to again thank our franchisees, suppliers, restaurant teams, and everyone across the McDonald's system for the commitment, partnership, and passion that you bring to this business. Your dedication is the driving force behind our achievements and what enables us to pursue this next chapter with confidence as we transform our long-term ambitions into tangible results. And with the new year well underway, we'll continue to lead, innovate, and deliver for our customers, our people, and our shareholders. Together, we will make 2026 a year that defines the future of McDonald's. With that, we'll take your questions.

Thank you for your commitment, partnership, and passion for this business. Your dedication is the driving force behind our achievements and allows us to confidently pursue this next chapter as we turn our long-term goals into concrete results. As the new year progresses, we will keep leading, innovating, and delivering for our customers, our employees, and our shareholders. Together, we will ensure that 2026 defines the future of McDonald's. Now, we will take your questions.

Our first question today is from Dennis Geiger of UBS.

Appreciate the insights. And Jill, very helpful to get an update from you as well. Chris and Ian, following a strong end to 2025, you both talked about a solid foundation into 2026. Could you talk a bit more on how you're thinking about the U.S. sales trajectory in 2026, given some of those sales drivers you identified and perhaps how you think about going three for three across value, marketing, and innovation to drive U.S. sales growth this year?

Sure. I'll start, and Ian, if you have any additional thoughts. But let's start with value. And as I mentioned in the call, the U.S. put in place the McValue program. That has performed well for us. We added to that the EVM toward the back half of the year. And as we go into 2026, McValue for us is going to continue to be the foundation for our value program. It's going to be something that always continues to evolve. Jill has talked about that in the past. And there are real conversations, live conversations going on right now in the system. But I feel really good about where McValue is headed in this year. And then I think also we've seen the power of great marketing. We've seen how something like a Minecraft or MONOPOLY or Grinch when you have strong value with that can really be an accelerant for the business. And I'm feeling good about the lineup that the U.S. team has there. And then, of course, we've talked about beverages. Jill also mentioned some of the other things that we're doing with burgers and chicken. And so I think we've got a strong slate of menu news lined up for the year as well. So now it comes down to what I talked about also in the comments, which is it looks great on paper. We've just got to go execute. But I think Joe and the team are working well with the franchisees. I know there's a lot of energy and excitement around this. And so I'm confident we're going to go out and execute with excellence.

And maybe, Dennis, just a couple of small builds to what Chris teed up. I mean, I think value and affordability, as we've talked about pretty consistently, are the greens fees. I mean, you've got to have it. It's core to our DNA as a business and brand, and it's certainly core to what consumers are expecting. And I think we would say we've done a pretty good job of kind of strengthening our value and affordability with the things that Chris talked about us putting in place. And that is certainly what we believe is one of kind of the underpinnings to the momentum that we're seeing in our U.S. business. We talked about the fact that in Q4, the U.S. had positive guest count growth, which is always a really strong indication that you're kind of getting to that sustainable top line growth that is going to drive both sales and more volume into the restaurants. And I think just maybe something to note that I think is another important proof point is our U.S. business had its strongest comp guest count gap to the near-end competitive set in Q4 in recent history. So I think those are all signs of encouragement to us. The key, though, is you've got to get the three for three. It's not just about value and affordability, or about menu, or about marketing individually. It's how you bring those together and leverage them to kind of get that holistic output that you saw us, I believe, deliver in Q4.

Our next question is from Sara Senatore of Bank of America.

I guess maybe I wanted to sort of dig in a little further on that value. I know you kind of approached it in two ways. One was sort of streamlining or systematizing the approach to the meals, kind of that 15% discount to a la carte prices. Then you also pulled some very sharp price points, as you said, the 5 and 8. So as you think about the pricing architecture, I guess, which of those do you think was more powerful? Because I'm asking in the context of restaurant-level margins that were sort of flattish year-over-year. And so assuming maybe there's some kind of pressure from that on franchisee margins. And maybe just tacking on to that, are any of the technology solutions that Jill mentioned, are those some of the ways to kind of maybe support this sharper value?

Sure. Well, I guess I'd say I don't think it's one or the other. I think what we've seen and certainly what we're trying to execute is the customer absolutely wants predictable value. And having an EVM is, I think, the way historically we have always delivered for that customer that predictable everyday value. So you need to have that, and certainly pleased with where the system in the U.S. was able to get to on that. As you well know, it's something that has been well established in our international business for years. And so we're in good shape there as well. But then also, the customer is looking for in this environment, some price-pointed items that are offering particular value on top of that. And so I think you've got to be able to have the predictable value, but the customer also needs to be excited around price-pointed items that come in and out of the menu, and that's what we executed against.

Maybe, Sara, to build on Chris's point regarding margin pressure, it's important to remember that growing margins requires strong sales growth. We experienced this in Q4 when our margins improved, especially in the U.S. In earlier quarters, we faced lower sales growth in the U.S. alongside rising inflation, which increased pressure. Additionally, as Chris pointed out, we need to achieve both objectives. Our average cash flow for owner-operators in the U.S. increased year-over-year. Historically, sustainable profitability and growth come from driving more volume and attracting more customers to our restaurants. If we can replicate the successful formula we utilized in Q4, I believe we're clearly capable of doing so effectively.

Next question is from Brian Harbour, Morgan Stanley.

I wanted to inquire about the capital budget. It seems to be running at the higher end of what you anticipated a couple of years ago, likely increasing by $1.5 billion compared to 2023. Is this increase solely due to your desire to accelerate new store construction, or is there another factor at play? It's noteworthy that even in markets with low population growth, you are aggressively pursuing unit growth. Do you believe that because the industry is facing challenges, now is the right time to capture market share and secure new sites due to greater opportunities? Is that the main reason behind this strategy?

Yes. Brian, it's Ian. Let me take that one. Well, I'd start just kind of going back to what we outlined in our December '23 Investor Day event. And we said there we expected our capital budget to go up basically $300 million to $500 million every year consistently as we got to our run rate of 1,000 gross openings in our wholly owned markets in 2027. And we've basically been fully on track to that every year. We were slightly above that range in 2025 at $3.4 billion of capital for the year. But that was driven by two things: some kind of FX headwinds from a weaker U.S. dollar and us being a little bit ahead of our future opening pipeline, so more spend related to '26 and '27 openings. So it was a healthy, let's call it, adjustment, as you would have seen in our guidance, again, in '26, we expect the capital to go up another $300 million to $500 million. So again, consistently in that range. We did, as we've talked about before, a lot of work before we kind of committed to where we thought we wanted to be at 50,000 units by end of '27 in '23 to really get deep on where we felt the gaps in trading areas, where we felt the opportunities were. And as you know, we've used the U.S. as an example before, which is one of our more mature, fairly penetrated markets, but a market where we hadn't grown net units since 2014, I think until basically '22, '23, a market where there's been a lot of population migration over time where our openings have not kept up. And so I think the ultimate measure is, are we getting the first-year sales in those new sites? Are we getting the returns that we expect? And the answer to both of those questions is yes, and that is confirmatory to the fact that we're getting the right sites in the right places and building the brand in a very healthy way.

Next question is from Dave Palmer at Evercore.

I'm just trying to think about how I want to ask this question about what feels like picking up in momentum, but also a picking up in your pipeline of ideas that you have going at the same time. Beverages is one example where you've tested something, you're coming out and you're confident that you have it and it will work. It sounds like you're testing stuff with chicken. It sounds like maybe earlier days there. I'm not sure there. Even on value, it feels like that's something where you're continuing to refine as you're getting momentum. So like a lot of companies coming out of COVID, there was a little bit of just a disruption during that period and adjustment. And now you're kind of getting your footing in terms of the pipeline. So maybe I don't know if that's an open-ended question, if maybe you want to comment on that. And then maybe even stuff that are more foundational beyond just even the tech stack, if you're thinking about things in terms of kitchen and other that might be things that we can think about for the future.

Thank you for the question. If we consider the company today and the current environment, we are certainly at a different starting point. I outlined several initiatives, such as Accelerating the Arches, that have positioned us uniquely. With 250 million consumers actively using our loyalty platform for 90 days, we can engage with our customers in ways we couldn't when we started this journey in 2020. The ability to unify our markets on a common tech stack enhances our agility and allows us to implement solutions much more effectively. We're focusing on leveraging these new capabilities to drive meaningful improvements in both revenue and productivity. Looking back to 2020 or even 2023, there was limited conversation about AI, and we weren't heavily discussing its implications. However, we are now considering all relevant factors, including the impact of GLP-1 on our industry, ensuring we remain proactive and maintain our brand position. Jill has shared that we are testing many ideas, and it's important to note that each restaurant is unique in its approach. We are eager to share our insights with the system at our upcoming event in Las Vegas and will provide more updates this fall regarding the future direction of McDonald's.

Just perhaps to build on that, we've introduced, as I said upfront, the new category management structure, which we're pleased with the progress that we've made in the first nine months. And that really is helping to focus the organization. We're bringing together operations, supply chain, menu, marketing around the table together to work in concert to move at greater pace. And we can certainly see consumers are reacting well to new news as evidenced by the beverage test that we ran earlier in 2025 in the U.S. So we're seeing early benefits from moving with pace. And I think one part, but an important part has been the introduction of category management.

Next question is from John Ivankoe of JPMorgan.

It's certainly commendable to strive for taste and quality as key metrics for the McDonald's brand. However, my question pertains to what changes may need to occur within the kitchen to meet these objectives in the near, medium, and long term. Specifically, will there need to be significant alterations to equipment, technology, or layout to achieve the desired taste and quality outcomes? I bring this up based on observations from my travels, particularly in France, where I noted that some stores utilized very different equipment and layouts compared to the McDonald's locations I'm accustomed to. Essentially, I am inquiring whether there might be a version of an "Experience of the Future" concept that could be incorporated into the strategy over the next few years.

Thanks for the question, John. One of the advantages of operating in 115 different countries is that we have innovation happening throughout our system. When we think about enhancing taste and quality, we approach it without any preconceived ideas or limitations. The team’s challenge is to find ways to improve taste and quality, especially as our competitors are raising their standards. This is part of what Jill and her team are exploring. We don’t have a definitive answer on how this will affect the restaurants at the moment. However, as you may know, we are entering a remodel cycle. It’s hard to believe, but the Experience of the Future process in the U.S. began nearly a decade ago, and even longer in some of our international markets. Historically, our system tends to undertake remodels approximately every ten years. As we approach this upcoming remodel phase, we need to ensure that we are generating ideas that will drive business growth. We believe that improving taste and quality presents significant opportunities for us. Jill, I’ll turn it over to you.

Sure. So Chris has outlined some of the sort of the early thinking on where can we innovate going forward to make sure that our restaurants are set up to grow where we've identified growth opportunities, chicken. There's plenty of growth still in beef as well as the new areas of beverage. But we are also thinking about improving taste and quality around how we renovate today as well. So how do we help the restaurants execute to the gold standards that we have today as well? So we're kind of really thinking about this in a couple of different time frames: what we can do today and how do we get ready for the future.

Next question is from David Tarantino with Baird.

I had a couple of questions back on the U.S. value strategy, Chris. And I was wondering if you could comment on how franchisees in the U.S. are embracing the strategy and really 2 parts to that. One, some of the strategies you've had have required McDonald's to support that financially. What's the current sentiment in the system on extending that without McDonald's support? And then the second question, perhaps more importantly, is I think you've rolled out some new brand standards. And I was hoping you could comment on what that might mean for the pricing strategy on the core menu going forward. It seems like keeping price points low and price increases perhaps at or below inflation is important. So just wondering if you can provide some insights on how the system is thinking about that equation.

Sure. In my recent travels, especially during meetings with operators in Dallas earlier this week, I noted a strong enthusiasm regarding the current status of the business. Completing the year on a positive note in the U.S. sets a solid tone for the upcoming year. When cash flow increases and there's business momentum, it contributes to a positive outlook, particularly in the current environment where our performance stands out compared to others. Our franchisees seem to recognize and appreciate that the market is challenging, and we are proud of our results. As for the evolution of our support for EVMs, it is indeed transitioning; in some areas, that support has already concluded. Overall, our system evaluates business performance, and the data indicates that the EVM strategy is effective. I believe anyone reviewing the data would easily reach the same conclusion. However, as we've emphasized before, our support is timely, targeted, and temporary; we do not permanently subsidize pricing. Working collaboratively as a system over the past quarter and looking forward, I think the path is becoming clearer, although the ultimate direction depends on the franchisees. Regarding brand standards, it’s important to remember that franchisees set pricing, but we are the stewards of the McDonald's brand. Our brand revolves around value positioning, and while we don’t dictate exactly how franchisees should deliver value, they must protect the brand's integrity. Part of our brand's identity is our leadership in value. We actively support franchisees through Revenue Growth Management, offering various strategies to achieve this. We expect that however franchisees choose to align with these principles, they will uphold the legacy that Ray Kroc established, which includes maintaining one of the world’s premier brands that continues to excel in value.

Next question is Greg Francfort over at Guggenheim.

I guess I had two questions. One, you made a comment about customers increasing their frequency on the loyalty program. Do you have a sense for how much of a needle mover that is? And then just the second part of that is, I think you also made a comment about accelerating the global tech stack and being kind of almost where you want to be. What are the remaining hurdles to getting that done?

I appreciate the opportunity to address those questions. Regarding the loyalty program, I want to emphasize that during our Investor Day in December 2023, we set a target of reaching 250 million 90-day active users by the end of 2027. Currently, we have 210 million 90-day active users, which puts us in a strong position to meet that goal. Active loyalty membership is our most critical digital metric because it drives increased visit frequency and spending over time. Customers engage with us more often, which benefits both them and us. We have a robust pipeline of ideas to enhance our loyalty offerings moving forward. To give you some specific data, if we examine our U.S. business, the average customer visited us 10.5 times in the year prior to joining our loyalty program. After becoming a loyalty member, that number jumped to 26 visits in the following year. This reflects a more than 2.5 times increase in visit frequency, along with higher spending over time. This highlights the significance of loyalty and our desire to continually add value to encourage consumer participation and more frequent interactions. On the tech stack, we've communicated our goal of transitioning from a fragmented, decentralized technology organization to a unified system with common platforms. During our Investor Day in 2023, we discussed our aim to establish three tech-enabled platforms: consumer, restaurant, and company. We are making good progress on each of these, and although there is still work to be done, we are confident in our current position and the pace at which we are advancing toward our overall objectives.

Next question is Andy Barish with Jefferies.

Wondering if we go back to the beverage efforts in the U.S. and kind of interesting that you did not mention CosMc's that seems to be a shift. And any color you're willing to provide just in terms of the rollout as we look towards the rest of this year?

Sure, I'll answer that question. We are very excited about the beverage launch in the U.S. later this year, which will be under the McCafe brand. We learned a lot from the CosMc's test, and those insights have influenced the setup of this new beverage range. The results from the program exceeded our expectations and led to additional occasions for consumption, primarily during snack, dinner, and evening hours. We also noticed an increase in the average transaction value. The financial outcomes are looking positive. We gained valuable knowledge about the recipes, offering a variety that includes indulgent coffees, refreshers, energy drinks, and crafted sodas, all of which performed well, especially crafted sodas, refreshers, and energy drinks. We will continue to focus on providing great tasting products at competitive prices while ensuring the speed and convenience our customers expect. More details will follow, and while we aren't disclosing specifics about the timing just yet, you can anticipate announcements both in the U.S. and internationally.

Next question is from Lauren Silberman at Deutsche Bank.

Very much. Great quarter, strong acceleration across segments on a two-year basis. As we look to '26, we still have a lot of dynamics in the consumer environment. It sounds like you have a really strong playbook. Can you give any color on how we should be thinking about, I guess, Q1, knowing there's some weather there, still have a little bit of the E. coli lapse? And then thoughts on the same-store sales progression as we move through '26.

Lauren, it's Ian. Let me take a crack at that, and I'm sure Chris will add on here. Look, I think as we've talked about already, we feel really good about the underlying momentum and kind of the consistency of that across each of the three operating segments. I think we expect that momentum to kind of continue in '26. And obviously, what we're focused on and we've talked about a lot is really going three for three, focusing on the things that are within our control. I think we expect probably that the first half will be likely a little stronger than the second half, and that's just largely a reflection of kind of the benefit of the favorable year-over-year comparisons that we're up against. Maybe just to give a little color by segment. I think for the U.S., we've had a solid start in January. We had good kind of underlying momentum, as you've heard us talk about today, supported by, I think, what we've done with extra value meals, obviously, McValue more broadly. I think we would say we expect Q1 comp sales growth to decelerate sequentially from the 6.8% in Q4 that you saw. I think there are two key reasons for that. One is Q4 growth was particularly strong, obviously driven by two really strong activations in MONOPOLY and Grinch. And then, as is well known, you've heard from many others, obviously, we had severe weather impacts in the U.S. kind of beginning in late January that pressured the industry traffic, pressured our traffic, obviously, and caused quite a few restaurants to close or reduce hours for a number of days. We estimate that weather impact to be about 100 basis points for the full quarter just when you look at kind of the drag that we saw in January. I think on international, kind of a similar story. I mean, we had a solid start in IOM in January. Again, we believe we've got kind of strong and consistent underlying momentum. But we do expect Q1 to decelerate sequentially from the 5.2% that we had in IOM in Q4. Again, we've got some weather, I would say, impacts in a number of markets in Europe through January that have put a little bit of pressure kind of on the underlying momentum. And then IDL, again, expect a sequential decrease from the 4.5% that we had in Q4. Again, we feel pretty good about the underlying momentum. It's really just driven by, I would say, the kind of continued macro pressures in markets like China and parts of Latin America. So I think we're really confident about what's within our control, really confident about the underlying momentum of the business, and certainly feel good about our ability to continue to kind of execute well even though the environment remains challenging.

Next question is from Jon Tower of Citi.

Maybe, Jill, one for you. I was hoping you went through a lot of the menu ideas coming in 2026 across the globe in the U.S. Specifically in the U.S., though, I was hoping you could drill a little bit more into how you're thinking around the GLP-1 adoption likely picking up this year with orals being available and how you're thinking through the menu operators across your system actually asking you how McDonald's is going to potentially address this shift in consumption?

Sure. Well, let me start, and then I'll let Jill fill in. But as I mentioned in my comments earlier, we're certainly spending a lot of time and paying close attention to it. I can tell you right now, we've looked pretty hard, and we don't yet see evidence of it really having a material impact on our business. Now that said, as you noted, pill form has just become available. We know the pill form has had pretty strong adoption in the early weeks. Lilly will come out with a pill form of their own sometime in probably Q1, Q2. And so certainly, our view is that adoption is going to continue to grow. And as adoption grows, we know that consumers' behavior changes. We know that in general, they eat fewer calories in the day, but also what they eat, the mix of that changes. Fortunately, for us, protein is one of the areas that this consumer, the GLP-1 consumer is still very much interested in, and we've got a great protein offering on our menu. So I think that's an area of strength for us. But we're also seeing changes around maybe less snacking, changes in some of the beverages that they drink, less sugary drinks. And so all of those things are factoring into some of what we're out there experimenting with and testing with. And ultimately, as we learn more about that and get feedback from our customers, those things could make their way onto the menu. But Jill, I'll let you kind of pick it up from there.

Sure. We do have a history of staying close to customers and innovating and adapting our menu as required. So we are already pretty protein forward, fish, chicken strips, Snack Wraps, sausage biscuit. We have a number of items on the menu that customers who are on GLP-1 are enjoying. I think we can call out and just help customers a little bit more, understand what is high protein on our menu because there are a number of options. But we're also going to continue to learn, see what's going to interest them. We have a couple of ideas that we are already looking at for the longer term. So we will be led by the customers and what they want from us, but there's plenty for them to enjoy in our menu currently.

Our last question today is from Jeff Bernstein at Barclays.

I'm trying to understand the barbell strategy we've discussed, particularly concerning value. In the U.S., can you provide insights on the scores you're observing and perhaps the share of value or sales mix? I'm interested in where value stands and your comfort level with it. Conversely, there seems to be less emphasis on the premium offerings lately. How should we consider the balance in that area? It's clear that franchisees would like to promote, and you likely would too, the higher end of that barbell. What are your thoughts on pushing more premium product offerings as we move into 2026 to create a balance with value?

Sure. Well, we've talked about on prior calls the fact that industry-wide, we've seen traffic hold up pretty well with upper-income consumers and traffic has been pressured with lower-income consumers. And of course, lower-income consumers are more value and affordability sensitive. We were pleased to see that we gained share with that low-income consumer in December, which was very much one of the criteria that we set around our value program. And so obviously, we've got to continue that. But I think we're in a better position certainly with that part of the consumer cohort. And then on the premium side, we're going to have menu innovation that I think is going to continue to appeal to the upper-income consumers. I think some of the beverage items could clearly go in that category. I think some of what we might be able to do in chicken and burgers as well could fit under that. So we're a business where 90% of the customers are coming into our restaurant in the U.S. at least once a year. And we need to make sure that we've got a broad offering that appeals to all of them and recognizes that they have different needs. So I feel think we've got a good strategy on that. But certainly, the expectation for the balance of '26 is that, that low-income consumer is going to continue to be under pressure, and there should be, call it, mid-single-digit growth available with the upper-income consumer. And so how do we make sure we're winning with both of them.

Thanks, everybody, for joining the call. If you want any types of follow-up, please send me an email. We can get something scheduled. Other than that, have a good evening, and we'll talk to you later.

This concludes McDonald's Corporation Investor Call. You may now disconnect and have a great day.