McDonald's earnings beat forecasts despite US sales slip

McDonald's earnings for the third quarter beat profit expectations even as sales at established restaurants in the United States slipped slightly, according to the company. McDonald's reported adjusted earnings per share of $3.57 for the quarter ended 30 September, up 11% from a year earlier and above the consensus estimate of $3.36 cited by Zacks. Revenue rose 1% to $7.16 billion, below the consensus estimate of $7.28 billion. The split between profit and revenue shaped the reaction to the release, with the profit beat drawing attention while the revenue miss pointed to softer demand at home.

Global comparable sales, which measure restaurants open for at least a year, increased 1.5%. That pace was slower than the 3.6% increase recorded in the same quarter a year earlier. In the United States, comparable sales fell 0.2%, against a 2.4% increase a year earlier. The company attributed the domestic decline to fewer guest visits, partly offset by higher average spending per visit. Management pointed to improving domestic trends as the quarter progressed, after value offers gained traction late in the period. Comparable sales in the United States turned positive in September after falling in July and August, according to the earnings call transcript published by The Motley Fool.

International sales carried the quarter

Growth outside the United States kept the overall result in positive territory. Comparable sales in International Operated Markets rose 1.4%, led by Germany and Australia, while weakness in France held back the segment. Comparable sales in International Developmental Licensed Markets increased 4.2%, with Japan leading growth and China reporting negative comparable sales. The contrast between the domestic result and the licensed markets result showed how much of the quarter depended on restaurants outside the home market.

Systemwide sales, which count sales at every McDonald's restaurant including franchised locations, increased 4% to more than $38 billion. That figure is larger than reported revenue because sales at franchised restaurants are not recorded as company revenue. Franchised restaurant revenue increased three percent to $4.49 billion, while sales at restaurants the company runs itself fell 3% to $2.48 billion. The franchise model therefore supplied most of the revenue growth in the quarter, and franchised margins accounted for most of the restaurant margin dollars reported.

Loyalty sales added another source of repeat business. Systemwide sales to loyalty members reached $11 billion for the quarter across 70 markets, supported by more than 45 million loyalty members in the United States. The loyalty programme gives the company a direct link to frequent customers and a way to promote value offers without relying only on advertising. For a business built on repeat visits, that base matters when guest counts are under pressure, because members who return regularly can offset visits lost elsewhere.

Profit rose faster than revenue

Consolidated operating income increased 7% to $3.6 billion, according to the company release. The result included $56 million in pre-tax restructuring charges linked to its Accelerating the Organization programme. Excluding those charges, adjusted operating income increased 8%. Other operating income rose to $139 million from $37 million a year earlier, helped by gains on restaurant sales and excess properties, as reported by Zacks. Net income increased 9% to $2.49 billion. Diluted earnings per share were $3.51, up 10% from a year earlier.

The gap between revenue growth and profit growth reflected costs as well as sales. Selling, general and administrative expenses declined, in part because the prior-year quarter included higher marketing spending. Franchised margins increased on stronger franchised sales across the segments. Company-owned restaurant margins were roughly flat overall, with a decline in the United States offset by growth in International Operated Markets. The pattern left the company more dependent on franchise income in the quarter, a shift that tends to support margins when company-run restaurant costs rise.

The company also declared a quarterly cash dividend of $1.93 per share, an increase on the previous dividend. The dividend decision, announced alongside the results, signalled that management expected cash generation to remain steady despite the domestic sales decline. It also gave income-focused shareholders a concrete return while the company works on restoring guest counts in the United States. The board decision did not change the central question for the next quarter, which is whether value offers can bring back visits at a pace that lifts domestic comparable sales back into growth.

What to watch in the final quarter

McDonald's still expects capital spending of about $3.7 billion in 2026, mainly for new restaurants in the United States and International Operated Markets. It plans about 2,500 restaurant openings during the year. New restaurants add systemwide sales even when comparable sales are flat, because each opening brings in sales that did not exist a year earlier. That expansion helps explain why systemwide sales grew faster than comparable sales in the third quarter, and why the company continues to invest in openings while domestic demand remains uneven.

For readers, the result is a useful read on consumer spending. McDonald's serves a broad customer base, and a small decline in domestic comparable sales alongside higher average spending suggests customers are still visiting but spending more carefully, choosing value items or visiting less often. The international result shows a different picture, with licensed markets growing faster than the domestic business. Whether the domestic recovery seen in September holds through the holiday period will determine if the third quarter marks a low point or the start of a longer period of flat domestic sales.

The next update will come with fourth-quarter results, when investors will compare domestic comparable sales against the September improvement and check whether loyalty sales continue to grow. Until then, the third-quarter numbers leave a mixed picture: profit above expectations, revenue below expectations, international growth offsetting a domestic slip, and expansion continuing while the company leans on value to win back visits.