MCD

A month has gone by since the last earnings report for McDonald's (MCD). Shares have lost about 4.8% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is McDonald's due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for McDonald's Corporation before we dive into how investors and analysts have reacted as of late. McDonald's reported second-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. McDonald's reported adjusted earnings per share (EPS) of $3.38, up 6% year over year, and beating the Zacks Consensus Estimate of $3.32 by 1.8%. Higher sales-driven franchised margins and other operating income supported the bottom line.Revenues increased 4% year over year to $7.10 billion but missed the consensus mark of $7.14 billion by 0.5%. Global comparable sales rose with positive growth across all three operating segments. Global comparable sales increased 1.3% compared with 3.8% growth in the prior-year quarter. The United States recorded a 0.8% increase, driven by positive average check growth, including favorable product mix, partly offset by lower comparable guest counts.International Operated Markets comparable sales rose 1.5%. Germany, Australia and the United Kingdom led the improvement, while France remained a drag. International Developmental Licensed Markets advanced 1.9%, supported by Japan and positive results across all geographic regions, partly offset by weakness in China. Global systemwide sales increased 5%, or 4% in constant currencies, to $37 billion. U.S. systemwide sales rose 2%, while International Operated Markets and International Developmental Licensed Markets increased 6% and 8%, respectively.Loyalty remained an important demand driver. Across 70 loyalty markets, trailing 12-month systemwide sales to loyalty members increased more than 20% to $40 billion. The number of 90-day active loyalty users rose 13% to nearly 220 million at quarter-end. Revenues from franchised restaurants increased 4% to $4.39 billion. U.S. franchised revenues rose 2%, International Operated Markets gained 5%, and International Developmental Licensed Markets and Corporate advanced 9%.Sales from company-owned and operated restaurants increased 3% to $2.53 billion. U.S. sales declined 1%, while International Operated Markets rose 3%. Other revenues increased 6% to $182 million, reflecting contributions from technology-related fees and brand licensing arrangements. Franchised restaurant margins increased 4.3% to $3.71 billion and represented roughly 90% of total restaurant margin dollars. Growth reflected stronger sales across all segments and favorable currency translation in the international businesses.Company-owned and operated restaurant margins rose 1.8% to $387 million. U.S. margins declined 6% to $91 million due primarily to ongoing inflationary cost pressures. International Operated Markets margins increased 3% to $285 million, as sales growth and currency benefits were partly offset by inflation. Operating income increased 3% to $3.34 billion, or 2% in constant currencies. Results included $52 million in pre-tax charges, primarily related to restructuring under the Accelerating the Organization initiative. Excluding current- and prior-year charges, operating income increased 4%.Selling, general and administrative expenses increased 16.7% to $817 million. The rise primarily reflected higher employee costs, including incentive-based compensation, and expenses associated with the 2026 Worldwide Owner/Operator convention. Other operating income totaled $37 million compared with an expense of $29 million a year earlier, aided by higher gains on restaurant sales and excess properties. McDonald’s expects net restaurant expansion to contribute about 2.5% to 2026 systemwide sales growth in constant currencies. The company continues to project a full-year operating margin in the mid-to-high 40% range and SG&A expenses of roughly 2.2% of systemwide sales.Capital expenditures are expected between $3.7 billion and $3.9 billion. McDonald’s plans to open approximately 2,600 restaurants during 2026, generating about 2,100 net additions. Interest expense is projected to increase 4-6%, while the full-year effective tax rate is expected between 21% and 23%. In the past month, investors have witnessed a downward trend in estimates revision. At this time, McDonald's has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, McDonald's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. McDonald's is part of the Zacks Retail - Restaurants industry. Over the past month, Cheesecake Factory (CAKE), a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended June 2026 more than a month ago. Cheesecake Factory reported revenues of $1.03 billion in the last reported quarter, representing a year-over-year change of +7.7%. EPS of $1.44 for the same period compares with $1.16 a year ago. For the current quarter, Cheesecake Factory is expected to post earnings of $0.87 per share, indicating a change of +27.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.3% over the last 30 days. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Cheesecake Factory. Also, the stock has a VGM Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McDonald's Corporation (MCD) : Free Stock Analysis Report The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Starbucks Corporation SBUX enters the final quarter of fiscal 2026 with stronger comparable sales and earnings trends. Global comparable sales rose 7.9% in the fiscal third quarter, while net revenues reached $9.3 billion. EPS increased 70% year over year to 85 cents. The improvement was supported by higher customer traffic and spending, giving the company a stronger base for earnings growth.The U.S. business provides a key base for this growth. Comparable sales increased 7.9%, driven by a 4.2% rise in transactions and a 3.6% improvement in average ticket. Food attach reached a quarterly record across U.S. company-operated stores, while delivery and product modifications supported ticket growth. The balanced contribution from traffic and ticket growth gives the company a stronger foundation for earnings as comparable sales improve.Starbucks’ stronger comparable sales also supported margin expansion. Consolidated operating margin expanded 430 basis points to 14.4%, while North America margin increased 280 basis points year over year. Sales leverage, operational improvements and cost savings helped offset investments in Green Apron Service and menu innovation. The company also reduced G&A expenses by about 20%, with the decline supported by cost savings, the China business deconsolidation and the comparison with higher leadership-related expenses in fiscal 2025.Starbucks raised its fiscal 2026 expectations following the stronger performance. U.S. comparable sales are projected to grow a little more than 6%, while global comparable sales are expected to approach 6%. Consolidated operating margin guidance was raised to above 11%, and EPS guidance increased to $2.55-$2.65. Starbucks also expects coffee price pressure to ease in the fiscal fourth quarter, which could reduce a previous drag on margins.The earnings trajectory will depend on whether Starbucks can maintain comparable sales growth while preserving the margin gains achieved in the third quarter. The company remains on track with its $2 billion cost-savings plan through fiscal 2028. Sales leverage and cost savings could support earnings as comparable sales grow. However, the company expects continued variability in the broader consumer environment, making traffic growth an important factor for fiscal fourth-quarter performance. Shares of Starbucks have gained 18.5% in the past year against the industry’s 7.3% decline. In the same time frame, other industry players like Dutch Bros Inc. BROS and McDonald's Corporation MCD have declined 23% and 14.7%, respectively. Image Source: Zacks Investment Research From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.06, below the industry’s average of 3.09. Conversely, industry players, such as Dutch Bros and McDonald's, have P/S multiples of 3.43 and 6.5, respectively. Image Source: Zacks Investment Research The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share has increased in the past 30 days. Image Source: Zacks Investment Research The company is likely to report strong earnings, with projections indicating a 21.1% rise in fiscal 2026. Conversely, industry players like McDonald's are likely to witness an increase of 5.6%, year over year, in 2026 earnings. Meanwhile, Dutch Bros’ 2026 earnings are likely to witness a rise of 27.6% year over year.SBUX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report McDonald's Corporation (MCD) : Free Stock Analysis Report Dutch Bros Inc. (BROS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

McDonald's Corporation MCD delivered a mixed second-quarter 2026 report. Adjusted earnings beat expectations, but revenues fell short as U.S. traffic remained soft even while international comparable sales stayed positive.The investor question now centers on whether franchised margin growth, global expansion and improving international trends can offset weaker U.S. guest counts and pressure on company-operated profitability. Adjusted earnings were $3.38 per share, up 6% year over year and 1.8% above the Zacks Consensus Estimate of $3.32. Revenues rose 4% to $7.10 billion but missed the consensus mark of $7.14 billion by 0.5%. McDonald's Corporation price-consensus-chart | McDonald's Corporation Quote Franchised restaurant margins increased 4.3% to $3.71 billion and represented roughly 90% of total restaurant margin dollars. Company-operated restaurant margins rose 1.8% overall, but U.S. margins fell 6% to $91 million, reflecting continued inflationary cost pressure. U.S. comparable sales increased 0.8%, supported by positive average check growth and favorable product mix, but lower guest counts limited the result. Management estimated that value execution issues accounted for about two-thirds of the customer traffic shortfall versus expectations.The weakness carried into the third quarter, with U.S. comparable sales slightly negative in July. Chipotle Mexican Grill, Inc. CMG reported second-quarter comparable restaurant sales growth of 2.2%, including a 1.0% increase in transactions. Restaurant Brands International Inc. QSR posted 8.5% comparable sales growth at Burger King U.S., adding competitive context to McDonald’s traffic challenge. International Operated Markets comparable sales rose 1.5%, led by Germany, Australia and the United Kingdom. International Developmental Licensed Markets increased 1.9%, with Japan leading growth while China remained a drag.Management expects comparable sales growth in both international segments to accelerate sequentially in the third quarter and on a two-year stacked basis. That outlook gives MCD a potential offset while U.S. traffic initiatives take time to gain traction. McDonald’s still expects to open about 2,600 restaurants in 2026, producing roughly 2,100 net additions. Net restaurant expansion is projected to contribute about 2.5% to systemwide sales growth in constant currencies, even as the 50,000-restaurant target moves to 2028.The company continues to expect a full-year operating margin in the mid-to-high 40% range. Capital expenditures are projected at $3.7-$3.9 billion, while interest expense is expected to increase 4-6%. The outlook therefore pairs continued restaurant investment with higher financing expense. The quarter leaves investors with a clear trade-off. Franchised economics and international growth remain supportive, but U.S. traffic, company-operated margins and execution are still key variables to watch.MCD currently carries a Zacks Rank #3 (Hold), a neutral short-term signal. The VGM Score of D and Value Score of D are less supportive, while the Growth Score of C is middling. The Momentum Score of B is the strongest Style Score signal, but the overall mix does not point to a uniformly favorable setup. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McDonald's Corporation (MCD) : Free Stock Analysis Report Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

During the August 11 episode of CNBC’s Mad Money, host Jim Cramer discussed McDonald's Corporation’s (NYSE:MCD) recent earnings report and said: McDonald's Corporation’s (NYSE:MCD) second-quarter earnings report highlighted specific execution missteps that eroded domestic foot traffic. Systemwide sales reached $37 billion globally, supported by active user expansion across digital loyalty programs. However, management mentioned during the earnings call that domestic weakness stemmed from an overly crowded promotional calendar spanning major global sports partnerships as well as new product rollouts, which clogged restaurant operations and slowed kitchen service times. Furthermore, an inconsistent franchisee pricing rollout of the Every Day Affordable Price menu under $3 coincided with a reduction in digital flash deals. To address these operational bottlenecks, Skye Anderson was appointed as President of McDonald's USA. Management emphasized on a structural shift in marketing, steering the operational focus toward improving food quality, scaling proprietary beverage platform initiatives, and optimizing digital reward frameworks. Macroeconomic pressures continue to weigh on the broader quick-service industry, with persistent wage inflation and reduced dining frequency among low-income households compressing store-level margins. As per Investing.com, on August 5, Bernstein SocGen Group revised its price target on McDonald's Corporation (NYSE:MCD) down to $295 from $310 while maintaining a Market Perform rating. The firm pointed to prolonged domestic traffic softness and delayed value recovery. With it being valued at 21 times earnings and offering a 2.7% dividend yield, valuation multiples sit below historical averages, yet sluggish domestic momentum leaves the thesis dependent on operational execution. Insider Monkey 13F tracking data shows institutional hedge fund ownership moving to 83 funds in the first quarter of 2026, down from 91 funds in the fourth quarter of 2025. The prominent shareholder in Q1 was Arrowstreet Capital after increasing its stake by 18%. On the short side, McDonald's Corporation (NYSE:MCD) has a short float of approximately 1.66%. That minimal short positioning shows Wall Street is not aggressively betting against the company. Investors are instead looking at it as a steady defensive anchor while management works through its operational reset. Whether the stock goes back to its historical premium depends on how quickly new leadership can streamline store operations and restore store-level foot traffic. While we acknowledge the potential of MCD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Jim Cramer Flags Thomson Reuters (TRI) as a Value Trap and Jim Cramer Picks CoreWeave (CRWV) as the Better Buy Over IREN. Disclosure: None. Follow Insider Monkey on Google News.

McDonald’s second quarter results landed in line with Wall Street’s revenue expectations, with earnings slightly above consensus. Management attributed the quarter’s muted U.S. performance to inconsistent execution of value menus and operational complexity at the restaurant level. CEO Chris Kempczinski stated, “We simply didn’t execute at the level we needed to in the second quarter,” highlighting that U.S. restaurant teams struggled with too many simultaneous deployments and underwhelming marketing programs. Internationally, menu innovation and value offerings in countries like Germany, Australia, and the U.K. helped support steady growth, even as the broader consumer environment remained challenging. Is now the time to buy MCD? Find out in our full research report (it’s free). Revenue: $7.1 billion vs analyst estimates of $7.13 billion (3.8% year-on-year growth, in line) Adjusted EPS: $3.38 vs analyst estimates of $3.32 (1.8% beat) Operating Margin: 47%, in line with the same quarter last year Locations: 46,028 at quarter end, up from 44,113 in the same quarter last year Same-Store Sales rose 1.3% year on year (3.8% in the same quarter last year) Market Capitalization: $193.7 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Dave Palmer (Evercore): Asked about the near- and medium-term opportunities for improving U.S. value perception. CEO Chris Kempczinski detailed recent pricing and menu changes, acknowledging execution missteps and emphasizing upcoming alignment with franchisees. Dennis Geiger (UBS): Questioned the pace of operational and marketing fixes in the U.S. Kempczinski said operational improvements should be quick, but marketing enhancements will take longer, with full impact expected by 2027. Brian Harbour (Morgan Stanley): Inquired about franchisee participation in value programs. Kempczinski cited the flexible EDAP menu structure as a challenge, noting ongoing education and business reviews to drive better compliance. Sara Senatore (Bank of America): Asked if rapid expansion could affect same-store sales. CFO Ian Borden said growth pace was modestly adjusted due to inflation, but expects new openings and comps to remain balanced. Jon Tower (Citi): Probed operational overload from numerous launches. Kempczinski acknowledged too many initiatives in Q2 and outlined plans for a more focused deployment schedule. Our analyst team will be watching (1) the pace and effectiveness of operational improvements in U.S. restaurants, (2) the impact of renewed digital and value marketing efforts on guest traffic and loyalty engagement, and (3) international market momentum from new menu launches and beverage platform expansion. Progress on franchisee alignment and the execution of McDonald’s > NEXT initiatives will also be key indicators of future performance. McDonald's currently trades at $273.75, up from $265.23 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Arcos Dorados Holdings Inc. (NYSE:ARCO) shares climbed 7% after the Latin American McDonald’s franchisee delivered second-quarter earnings and revenue above Wall Street forecasts. Record quarterly sales, stronger customer traffic and double-digit comparable sales growth helped the company overcome a challenging consumer environment across its markets. Arcos Dorados reported earnings of $0.22 per share for the second quarter, beating the analyst consensus of $0.15 by $0.07. Revenue reached $1.31 billion, ahead of Wall Street expectations of $1.28 billion and 14.3% higher than in the comparable period last year. The result represented the highest quarterly revenue in the company’s history, supported by improved customer traffic and continued sales growth across its restaurant network. Net income increased to $45.0 million, or $0.22 per share, compared with $0.11 per share in the prior-year quarter. “Total Revenues, Adjusted EBITDA and Net Income all grew strongly in US dollars, despite challenging consumer dynamics in the second quarter of 2026,” said Luis Raganato, Chief Executive Officer. “In fact, total revenues of $1.3 billion were our highest-ever quarterly revenues, supported by the best guest volume performance of the last six quarters.” Systemwide comparable sales increased 15.3% during the quarter, supported by the company’s strongest guest volume performance in six quarters. The improvement in customer traffic helped Arcos Dorados generate growth despite pressure on consumers in several Latin American markets. Consolidated adjusted EBITDA rose 15.2% year over year to $126.8 million, setting a company record for a second quarter. Adjusted EBITDA margin reached 9.7%, representing an improvement of 10 basis points from the previous year. Excluding gains associated with a sub-franchisee transaction recorded in the second quarter of 2025, the underlying year-over-year margin improvement was 70 basis points. Arcos Dorados also delivered a significant improvement in its bottom-line profitability. Net income margin expanded by 150 basis points year over year to 3.4%. The increase was supported by improved net interest expense and financing results, together with a lower effective tax rate. Combined with the growth in adjusted EBITDA, the figures indicate that the company was able to translate higher sales and customer traffic into stronger earnings during the quarter. Digital channels remained an important growth engine for Arcos Dorados, with sales through digital platforms increasing approximately 25%. Digital transactions represented 66% of systemwide sales during the quarter, highlighting the increasing importance of mobile ordering, delivery and other digital channels to the company’s restaurant operations. The company’s loyalty programme also continued to expand, reaching 34.3 million registered members. Active loyalty members visited Arcos Dorados restaurants roughly five times as frequently as customers who were not members, demonstrating the programme’s potential to increase engagement and repeat visits. Arcos Dorados continued expanding its physical footprint alongside its digital operations. The company opened 16 restaurants during the second quarter, bringing its total restaurant network to 2,548 locations. Continued restaurant openings provide an additional source of long-term growth as the company strengthens its position as McDonald’s largest independent franchisee in Latin America and the Caribbean. Expansion of the restaurant estate, combined with higher digital adoption and stronger loyalty engagement, gives Arcos Dorados several channels through which to drive future sales. Cash generation also strengthened considerably. Arcos Dorados generated adjusted free cash flow of $143.4 million over the latest 12-month period, compared with just $16.1 million during the equivalent prior-year period. The substantial improvement provides greater financial flexibility for restaurant investment, shareholder returns and other strategic priorities. Following the 7% rise in the shares, investors are likely to focus on whether Arcos Dorados can maintain its stronger customer traffic and double-digit comparable sales growth while continuing to expand margins and cash generation in the second half of 2026. Arcos Dorados Holdings stock price

Over the past six months, McDonald’s stock price fell to $273.75. Shareholders have lost 15.3% of their capital, which is disappointing considering the S&P 500 has climbed by 11.7%. This might have investors contemplating their next move. Following the drawdown, is now the time to buy MCD? Find out in our full research report, it’s free. With nicknames spanning Mickey D's in the U.S. to Makku in Japan, McDonald’s (NYSE:MCD) is a fast-food behemoth known for its convenience and broken ice cream machines. A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow. McDonald's sported 46,028 locations in the latest quarter. Over the last two years, it has opened new restaurants at a rapid clip by averaging 4.2% annual growth, among the fastest in the restaurant sector. Furthermore, one dynamic making expansion more seamless is the company’s franchise model, where franchisees are primarily responsible for opening new restaurants while McDonald's provides support. When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations. If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills. McDonald's has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the restaurant sector, averaging 27.3% over the last two years. Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last seven years, McDonald's grew its sales at a sluggish 4.2% compounded annual growth rate. This wasn’t a great result compared to the rest of the restaurant sector, but there are still things to like about McDonald's. McDonald’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 20.7× forward P/E (or $273.75 per share). Is now the right time to buy? See for yourself in our full research report, it’s free. ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 8:30 a.m. ET Vice President of Investor Relations - Dexter Congbalay Chairman and Chief Executive Officer - Chris Kempczinski Chief Financial Officer - Ian Borden Operator: Hello, and welcome to McDonald's Second Quarter 2026 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. [Operator Instructions] 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. Dexter Congbalay: Good morning, everyone, and thank you for joining us. With me on the call today are Chairman and Chief Executive Officer, Chris Kempczinski; and Chief Financial Officer, Ian Borden. 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 via our website. And now I'll turn it over to Chris. Christopher Kempczinski: Good morning, everyone, and thank you for joining us. Before Ian gets into the detailed results for the quarter, I want to do 2 things: recap our progress under our Accelerating the Arches strategy and highlight how McDonald's remains positioned for long-term value creation and provide a snapshot of the quarter, what worked, what didn't and what we're doing to address our opportunities. At the end of our prepared remarks, I'll preview McDonald's > NEXT in advance of our Investor Day. We'll also share some additional perspective on our leadership change in the U.S. and why Skye Anderson's past accomplishments give me confidence that she is the right leader for this moment. Almost 6 years ago, we unveiled our Accelerating the Arches strategy to drive our next chapter of growth and build the foundation for our digital-first future. The strategy worked. We've grown systemwide sales roughly $40 billion and operating income by over $3 billion. We've done this by focusing on our 3 growth pillars: our MCDs, as we like to call them. We maximized our marketing by leaning into our fans to create cultural moments that drove consumer engagement and restaurant traffic. As a result, over the last 6 years, our brand relevance with the critical U.S. Gen Z consumer has increased, and we now hold a significant advantage versus our primary competitor. The McDonald's brand remains one of one in our industry and among the most powerful brands in the world. We committed to our iconic core menu by focusing on our $17 billion brands with a particular focus on our critical beef, chicken and beverage categories. We created a global category structure to increase our pace of innovation, and we're already seeing significant benefits from this focus, most notably in beverages. And we've doubled down on the 4 Ds. In digital, we've built the industry's largest customer platform with nearly 220 million active loyalty users, and we're now among the largest loyalty programs in the world. In delivery, we've grown an efficient business with an industry-leading cost structure that generates more than $20 billion in annual systemwide sales. In drive-thru, we've modernized operations and invested in technologies that have improved accuracy and reduced service times. And in development, we're well on our way to 50,000 restaurants, thanks to the most aggressive expansion of new restaurants in our history, all while keeping our existing restaurant estate among the industry's most modernized. As we've executed against these growth pillars, we've also done the hard work behind the scenes to integrate our systems for a digital-first future. We're now close to having all our major markets on one app, one loyalty program, one pricing engine, one HR system and one finance system. This will drive cost savings, accelerate innovation, harden security and enhance stability. Critically, with all our data soon to be pooled in a global data lake, we'll also be well positioned to capitalize on the new opportunities afforded by artificial intelligence. You'll hear more about all of this at our Investor Day in September. Now that I've recapped the progress under Accelerating the Arches and highlighted our continuing efforts towards long-term value creation, I'm going to provide a snapshot of our second quarter. McDonald's systemwide sales grew 4% in constant currency, reflecting the growing contribution from new unit openings. Global comparable sales grew 1.3% with positive comparable sales growth across each of our operating segments. Our international markets, which contribute more than half of our systemwide sales and operating profit continue to demonstrate that our playbook is working. Strong execution in value offerings, menu innovation and creative marketing across many of our international markets continue to resonate with customers and supported results that were broadly in line with our expectations. Turning to the U.S. After a solid start to the year, the business slowed significantly, posting comparable sales growth of 0.8% in the quarter. This was below our expectations and something we're going to address in greater detail on today's call. We don't have a strategy problem. We simply didn't execute at the level we needed to in the second quarter. Our execution opportunities fall into 3 buckets. First, although we've restored our overall value and affordability leadership, our restaurant level results show that execution was inconsistent across the system. The strongest performing restaurants consistently executed our new Every Day Affordable Price menu and delivered strong restaurant operations. We need that same level of execution in all our restaurants. Second, our restaurant teams were overwhelmed by too many deployments in the quarter, which led to less efficient restaurant operations. This impacted customer service times and as service times went up, satisfaction scores went down. And third, our marketing programs didn't deliver against expectations. I'm going to turn the call over to Ian now to cover our results and these execution opportunities in greater detail. Ian Borden: Thanks, Chris, and good morning, everyone. In the second quarter, McDonald's systemwide sales grew 4% in constant currency. Global comparable sales grew 1.3%, reflecting a challenging consumer environment that saw QSR industry traffic in several of our largest markets continue to be flat to negative. Global comparable sales were also impacted by execution that was below our expectations in the U.S. business, as Chris just highlighted. For the first half of the year, systemwide sales grew 5% in constant currency and global comparable sales increased 2.5%. Starting with the U.S. Comparable sales grew 0.8% for the quarter and 2.3% for the first half. As Chris noted, we're not satisfied with our second quarter comparable sales growth. As we discussed on our Q1 call, we had a slow start to the quarter with comparable sales slightly negative in April as we lapped last year's highly successful Minecraft campaign. In late April, we augmented our McValue program with a new under $3 Every Day Affordable Price or EDAP menu. Similar offerings have been consistently successful across our top international markets. We also added a $4 Breakfast Meal Deal. Inconsistent restaurant level execution of the EDAP menu and consumer awareness levels below target resulted in lower incrementality than we expected. At the same time, the business pulled back on digital offers and removed our Buy One, Add One for $1 feature to offset the investment behind McValue. In combination, all of these factors negatively impacted visits from some of our most loyal customers. We estimate that these value execution factors accounted for about 2/3 of the customer traffic underperformance relative to our expectations for the quarter. The remainder of our underperformance can largely be attributed to our FIFA campaign in June. While the campaign provided a lift to the business and generated excellent system excitement, the campaign underperformed versus our expectations. Importantly, we're taking actions in the near term to address these opportunities. For instance, starting next week, we're launching more national digital flash offers to reenergize our high-frequency customers. In addition, we're going to target our most loyal users with more personalized digital offerings. We'll also be reallocating marketing dollars throughout the second half of the year to increase support behind our proven value offerings such as Extra Value Meals. While we've been pleased to see our value and affordability scores improve significantly since last year, we remain ready to adjust as needed. We have been consistent. We will not get beaten on value. As Chris noted, operations metrics worsened in the quarter as restaurant teams were overwhelmed with too many complicated deployments. We've already taken steps to simplify restaurant operations by eliminating several noncustomer-facing activities over the remainder of the year so that our restaurant teams can focus on delivering a great experience for our customers. In short, we're acting with urgency to improve our baseline guest traffic and put the U.S. business in a stronger position as we exit 2026. Now turning to the International Operated Markets. Comparable sales increased 1.5%, driven by Germany, Australia and the U.K. again this quarter. These markets continue to demonstrate that our playbook across value menu and marketing delivers solid results when well executed despite a challenging industry environment. After recording slightly negative comparable sales in April, as we mentioned in our Q1 call, IOM's performance improved as expected over the balance of the quarter, with comparable sales returning towards more normalized levels in May and June, and this has largely continued into July. On value, the majority of our top IOM markets benefited from strong EDAP menu offerings and meal deals as they have continued to respond to evolving consumer needs. Menu innovation behind chicken continued to drive growth across these markets, with Australia and Germany both gaining chicken share in the quarter. Australia generated momentum with its Korean Barbecue McCrispy limited time offering, one of the market's strongest chicken LTOs in recent years, while Germany continued its successful Chicken for Every Moment campaign featuring a mix of core products and LTOs. Germany also successfully launched our new specialty beverage platform in early May with an assortment of crafted sodas, refreshers, cold coffee and Red Bull Energizers. We're excited about the performance to date and our strong position in a category in its early stages of development. In regard to great marketing, 2 specific campaigns in the quarter are strong examples of how our market teams are bringing global ideas to life while executing them in locally relevant ways. The Menu Heist campaign, which we now have had success with in multiple markets, ran in Australia and showcased a curated selection of international McDonald's menu favorites exceeding expectations. And in Germany, Grimace returned to the market with a full menu of purple-themed offerings, driving significant social interaction, including 57 million views across social platforms and reinforcing the emotional connection to our brand while benefiting top line performance. Of our top 5 IOM markets, France's performance again fell short of our expectations. While it will take some time to improve alignment and execution across the system in France, we are clear on what's needed to drive performance. One element that is foundational is consistent everyday value. The market recently extended their EUR 4 Happy Meal component and reintroduced nationally price pointed meal deals that are resonating with consumers. Turning to the International Developmental Licensed Markets. Comparable sales increased 1.9%. Japan again led the way by delivering its tenth consecutive quarter of positive comparable guest count growth. This reflects strong execution behind our loyalty platform, which launched less than a year ago and already has nearly 20 million 90-day active users who are visiting us more often. The segment's comparable sales growth was tempered by results in China, where we expect the macro environment and the consumer backdrop to remain challenging in the near term. Turning to the P&L. Our top line performance drove adjusted earnings per share of $3.38, which included a $0.03 benefit from foreign currency translation. On a constant currency basis, this represents a 5% increase versus the prior year. We currently estimate a tailwind of about $0.15 from the impact of foreign currency translation on full year 2026 adjusted EPS based on current exchange rates. That's down from our previously estimated range of a $0.20 to $0.30 tailwind. As always, this is directional guidance only because rates will continue to change as we move throughout the remainder of the year. In the second quarter, we generated more than $4 billion in restaurant margins, and our year-to-date adjusted operating margin was 46.9%, highlighting the resiliency of our business model. General and administrative expenses were 2.2% of systemwide sales, consistent with our expectations for the quarter and included expenses associated with our biennial worldwide convention with franchisees. We remain on track for G&A to be about 2.2% of systemwide sales for the full year. Chris and I are focused on managing our enterprise cost structure. We've made investments over the last couple of years to consolidate and upgrade our global systems and processes, with a clear goal of delivering future efficiency. In 2027, we expect that we'll begin to see the benefits from those investments as we seek to lower G&A percentage spend. As we mentioned last quarter, in relation to margin performance at our U.S. company-operated restaurants, we continue to evaluate the optimal franchisee versus company ownership balance to maximize system value. As part of this ongoing work across both the U.S. and international markets, we expect incremental company-owned restaurant divestitures, some of which occurred in the second quarter to continue in 2026 and beyond. We'll provide more details on our refranchising efforts and our G&A outlook during our Investor Day in September. We continue to be highly disciplined allocators of capital towards new restaurants based on our ability to generate attractive returns. We've completed our new restaurant pipeline analysis that Chris and I spoke about last quarter. Due to the current pressured consumer environment, coupled with the cumulative inflationary impact on development costs, we now expect to reach 50,000 restaurants globally in 2028. That's a slight adjustment to our previous plans to reach that level by the end of 2027. Yet, even with this change, this continues to be the fastest period of restaurant growth in McDonald's history, and we remain on track to open about 2,600 gross restaurants by the end of this year. As we look ahead, Chris and I remain very confident about our pathway to enhancing shareholder value. We have both led large parts of the operating business in prior roles and have demonstrated the ability to proactively address and solve issues to drive strong performance. That's exactly what we're working together to accomplish in the coming quarters. And with that, let me turn it back over to Chris. Christopher Kempczinski: Thanks, Ian. As we've discussed today, the opportunities we see in the U.S. are largely execution focused, and we're acting with urgency to address them. At the same time, we're equally focused on driving sustainable long-term growth and strengthening our competitive advantages. That's why at our worldwide convention in June, we introduced McDonald's > NEXT, our new growth strategy with a clear ambition to be more customers' first choice. We'll do this by improving the taste and quality of our food, engaging and co-creating with our fans in exciting new ways and simplifying our restaurants so our crew can deliver great hospitality for our guests to what they do best. These priorities are highly complementary to the execution improvements we're focused on today. And while this plan will require system investment, we expect it will also be meaningfully self-funded by the many productivity opportunities that we see in our company and franchisee restaurant P&Ls, along with the strong top line growth that it will deliver. The system is behind this new strategy. In a post-event survey, more than 90% of owner operators see how McDonald's > NEXT will drive growth. And they're energized by the growth and productivity opportunities available to us and confident in our system's ability to execute against them. We'll share in detail on Investor Day why McDonald's > NEXT represents such a massive opportunity to catalyze our global business, including in the U.S., building on a foundation created through Accelerating the Arches. But we're not waiting to get after the opportunities within McDonald's > NEXT. As we've been saying internally, next is now. One way we're acting next now is in beverages. The launch of our new beverage platform in May was an important part of upgrading our taste and quality. Early results exceeded our expectations across our lead markets of the U.S., Canada and Germany. In the U.S., sales are ahead of plan. Guest checks are higher, and we're seeing new occasions emerge throughout the day. We've also seen strong food attachment rates on these orders. The addition of Red Bull Energizers in the U.S. in the coming weeks will only further this momentum. Another way we're actioning next now is through our people. Central to McDonald's > NEXT is elevating the experience we offer customers in our restaurants from the taste and quality of our food to the hospitality that we provide. None of that happens without our people, which is why on October 5, we'll officially launch a program to retrain the 2 million-plus restaurant crew, company employees and supplier partners who work under the Golden Arches on gold standard taste, quality and hospitality. October 5 is Ray Kroc's birthday, something we also call Founder's Day. So it's fitting that we start on this day the largest training exercise undertaken in our history. Finally, a few words on our leadership transition in the U.S. We announced this morning that Skye Anderson is the new President of McDonald's U.S., effective today. Skye's appointment reflects the depth of leadership across McDonald's and completes a planned transition with Joe Erlinger, who has assisted with this change. Skye is an exceptional leader with 26 years of experience across multiple parts of our business, including finance, operations, market leadership, Global Business Services and most recently as Chief Operating Officer of McDonald's U.S.A. Throughout her career, she has consistently been a hands-on leader who has demonstrated strong business judgment and operational discipline. Skye is a change agent, driving positive performance. I've had the opportunity to work closely with Skye throughout much of her career. When I led the U.S. business, I asked her to relocate from Australia, first to run our West Coast field office and then to lead our entire West Zone. Over a 4-year tenure as Head of the U.S. West Zone, she helped support strategic initiatives that modernize the base of more than 5,700 restaurants, drove comparable sales growth of more than 30% and increased average restaurant unit cash flow by $100,000. She was a key partner to me in the success we achieved through our Bigger, Bolder Vision 2020 program and a leader who could innately connect strategies to execution. Later, when we decided to fundamentally rethink how we support our global system and unlock greater productivity and profitability, I asked Skye to build and lead our new Global Business Services organization. The talented team and the new capabilities that she put in place will help deliver much of the enhanced productivity that will be central to McDonald's > NEXT. Since April, as the Chief Operating Officer in our U.S. business, she's been reengaging with our franchisees and spending time in the restaurant observing operations. She understands the opportunities available to us in the U.S. to unlock superior performance, and her transition as Chief Operating Officer means that she's ready to hit the ground running as U.S. President. As she steps into this role, she'll have my full support. Having led the U.S. business myself, I have a great appreciation for the capabilities, passion and pride of our U.S. franchisees and company employees. When we're on our game, no one can beat us, and I'm committed to helping our U.S. system regain its swagger. I'd also like to recognize Joe Erlinger, who has decided to leave McDonald's after more than 2 decades with the system. Over the last nearly 7 years leading our U.S. business, Joe helped guide the organization through a period of significant growth and transformation. Joe has been a key partner in the success we've enjoyed with the Accelerating the Arches strategy, delivering strong sales and operating income performance. He oversaw significant gains in digital, delivery and chicken share and developed several of the leaders now running key markets in IOM. I want to thank Joe for his many contributions to McDonald's and wish him all the best. One final thought to share before we open the call to questions. Ray Kroc once said, we're living in a rapidly changing world, so McDonald's will change with it. Well, that's what McDonald's > NEXT is designed to do, earn the right to be more customers' first choice. We're confident in the path ahead, and I look forward to seeing all of you at our Investor Day on September 23 in Chicago. With that, let's open it up for questions. Operator: [Operator Instructions] Dexter Congbalay: First question today is from Dave Palmer of Evercore. David Palmer: Chris, you had a comment in your prepared talking about how you thought value and affordability leadership had been restored. That surprised me a bit. I would have thought that value menu construction and the marketing around it was maybe in addition to chicken quality, a top 2 opportunity for improvement in the U.S. Perhaps could you just double-click on the U.S.? I know you made a lot of comments there, but about what you think the near-end opportunities for the U.S. are versus perhaps medium-term ones that might be a slower build? Christopher Kempczinski: Yes. Sure. Well, thanks for that, David. I think to answer that question, it's probably unpacking the various components of value and maybe go back to where we were last summer. So -- we talked about a year ago, a little over a year ago that we had gotten off sides on value. And that started with our base menu pricing. Our base menu pricing in many places has gotten ahead of competition. There has been a lot of work done since then to get our base menu pricing back in line. And the good news I can say in the U.S. is now if you look at our base menu pricing, beef, chicken, beverages, we are below our nearing competitors in each one of those categories when we look at that on a U.S. basis. So base menu pricing, we feel very good about where we are with that. The second part of getting our value proposition fixed was what we did around the meal deals. And as you know, we introduced the $5 Meal Deals. Those continue to perform really well for us. And I would say our meal deal is the best meal deal in the entire industry. So we feel really good about where we are with the meal deal. We also then, at the end of last year, brought back our EVMs. And this was something that we supported the franchisees with through a transition period. Getting EVMs back on the menu has also been something that has been very helpful to the business and something that is performing at or above our expectations on EVM. I think it's also worth noting that even though we supported our franchisees for just a transition period on EVMs, the franchisees in the U.S. are still maintaining that 15% discount or better when you look at an EVM versus on an a la carte. So you take each of those base menu pricing, meal deal, EVM, a lot of progress on that, and I feel really good about where we are. And it shows up when we track, as you know we do, how we're being perceived by our customers on value and affordability. We've seen a big rebound in the value and affordability scores that we have in the U.S. Our internal numbers, just order of magnitude would be 7, 8 points of improvement that we've seen on those. So there was one final piece that we've talked about on prior calls that was an opportunity for us when we look at the U.S. and we compare it to other markets in the value construct that we know is successful around the world. And that is the EDAP menu, you could call that 10 items for under $3. That was sort of the last piece that we felt like we needed to get done in the U.S. And that was what McValue 2.0 as we referred to it. That's what we introduced in April of this year. As we look at actually what happened in the quarter, the 10 items for under $3 has not delivered against our expectation. Part of that was due to the fact that we're getting really inconsistent execution, only about call it, 60% to 65% of our system is currently executing the recommended pricing architecture with the 10 items for under $3. And the other thing that was an issue is we didn't get the awareness that we needed when we launched that 10 items for under $3. That's a little bit of that execution issue that I was talking about, which is we just had a lot of messages out there with the customer. We didn't break through with that 10 items for under $3 message. So we didn't get the incrementality that we were expecting on that. We compounded that unintentionally by our system pulled off of a lot of digital offers. And digital offers for us is something that is core to kind of our loyalty program. It's something that's valued by our most loyal customers. And so that ended up being a bad trade. Putting in an EDAP program that didn't deliver and taking away a lot of digital offers and the Buy One, Add One program, that was the point I referenced or Ian referenced in the call, which is 2/3 of our miss in the quarter was related to that bad trade. So we've got some work now that we need to do to go get that fixed. As you know, in our system, that's not something that we just flip the switch on. It requires conversations with franchisees. But the good news is in talking with our franchisees, they're all aligned that we've got some work to do there to get that addressed. So at a high level, I feel really good about the progress that we've made around getting value and affordability leadership back in the U.S. We have an issue that we made a bad trade in Q2, and we've got to get that fixed, which is going to be Skye's focus over the next couple of quarters. Dexter Congbalay: Our next question is from Dennis Geiger at UBS. Dennis Geiger: Helpful commentary on the detail on some of the U.S. issues. And Chris, you just talked about sort of not just flipping the switch. But wondering if you could talk a little bit more about how quickly the issues that you flag across the execution, the ops and the marketing can be addressed and perhaps what that means as you think about the U.S. sales trajectory over the coming quarters in a still difficult macro backdrop? Christopher Kempczinski: Sure. Let me take kind of each of those. I'd say the first part on the operations side, that should be something that we see the fastest improvement on because that's something that is very much within our control. And it's going to start with really looking at the -- it has started with -- looking at the balance of the year calendar, looking at the balance of the year deployments that we're pushing into the restaurants and making sure that we've got a cadence there that we can actually go execute at a high level. So I feel really good that we're going to be able to get after some of these operations opportunities by really just cleaning things up, giving our crew more support and having that laser-like focus on that. So that would be part one. I think part two, on the marketing programs, I'd say that is it's a little bit of a mixed bag because obviously, in Q3, you're already in flight on all of those. And so your ability to actually change anything from a marketing calendar standpoint, you're not going to be able to do that within Q3. We're certainly with Skye looking at what we can do in Q4 from a marketing program standpoint. And I think we'll be able to make some adjustments there. But that takes a minute in terms of just being able to get that lined up. But I think marketing is the second one that nothing in Q3, but we're certainly looking at opportunities for us to enhance that program in Q4, and we should be fully back to where we need to be in 2027. And then on value, I mean, value, as I said in my comments to the prior question, the good news is we've got high-level alignment with our franchisee leadership. We're seeing the same thing. We're seeing that we had a miss when we launched the EDAP menu and the fact that it came at the expense of what we were doing with our loyalty program was a bad trade. Now how you get that fixed in our system to how on value is always where we have the conversation with franchisees. The good news is we had a meeting with our franchisees a couple of weeks ago, and many of the things that Ian talked about were the outcome of those conversations with franchisees. We have another set of meetings set up with franchisees in early September, where we're going to talk about additional ways for us to address some of these value opportunities. And so I think come Investor Day, I'll have a better answer for you in terms of where we are aligning with our system on what we can do with the value and the speed with which that's actually going to flow through to things that you see in market. Ian Borden: Dennis, it's Ian. I might just kind of tag on to emphasize a couple of things Chris talked about. And then you've obviously kind of just teed up a bit of a -- I look forward to Q3. So I'll just maybe give you some commentary on that. I mean I think I just would emphasize, as you heard us say upfront that we're already taking action, getting digital kind of national offers back in place, getting more targeted kind of digital interaction with our most frequent consumers that I think have been a little disengaged with some of the changes that Chris talked about, plus as you heard me say upfront, we are reallocating some of our marketing dollars over the next several months to kind of put behind proven kind of value components like Extra Value Meals that we -- that continue to grow and are continuing to perform really strongly. I think as you heard us talk about on the execution opportunities that we've talked a fair bit about already, those certainly extended into the start of Q3 and comps in the U.S. were slightly negative in July. I think as we talked about a lot already, obviously, the team is acting with the right sense of urgency. The system is acting with the right sense of urgency, and we're beginning to take action to kind of get some of those execution issues addressed. But I think as you've heard Chris talk about, it's going to take a moment for those actions to start delivering impact. And I think the main thing for us is that the focus is on ensuring that we kind of get our execution to the level we expect and that our baseline momentum is in a stronger position as we exit 2026 in the U.S. business. I'm just going to -- also just touch quickly on IOM and IDL because I think we certainly expect in both segments that our comp sales growth will accelerate sequentially in Q3 from the 1.5% and 1.9% comps in Q2, respectively. Also expect that comp sales in both of those segments will accelerate on a 2-year stack basis. So just to kind of cover all the bases since you've teed that up. Thank you. Dexter Congbalay: Next question is Brian Harbour from Morgan Stanley. Brian Harbour: What was the reason for the lower franchisee participation just in the EDAP program, I guess. It seems like that's probably one of the pieces that's most important here just as you talk about that relative to some of the limited time offers and new products that you had. Do they not necessarily agree that, that's the most important driver of traffic right now? Or I guess, has it been -- maybe it's cost pressures that have driven that decision? How do you sort of ensure that better alignment, especially kind of going forward as you look to the next program as well? Christopher Kempczinski: Sure. Well, as you would imagine, when we launch something like the EDAP menu, which we did in April, we provide recommended guidance to our franchisees. So we're quite clear in terms of what we believe is the right pricing execution to deliver on our expectations for that program. And as I mentioned, most of our franchisees did deliver against that set of expectations. So what we're talking about here is, call it, 1/3 of the system that did not execute against what we were guiding around in terms of our EDAP menu. I think some of that is when you have a program which is 10 items for under $3, you leave a wide range of potential price points for individual items. Essentially, anything that's priced for under $3 technically qualifies for being within that program versus when you do something like a $5 Meal Deal where there's not nearly as much wiggle room that you have when it's a $5 Meal Deal. You're either on $5 or you're not on $5. So I think the construct of this probably provided more degrees of freedom where people perhaps saw an opportunity to go take pricing. And then as I said, that was compounded by the fact that the system pulled back in a pretty significant way on digital offers, and we also discontinued the Buy One, Add One program that had been something that our most frequent customers really valued as part of our overall value proposition. So the net-net of that is there was a fairly significant amount of price that got taken in Q2 as a result of those two moves. Now what we're doing about that, obviously, with those folks that are not complying, as you would imagine, their business results are a lot softer than those who haven't complied. And so it starts with an education piece to show when you execute the program as designed, here's what that performance looks like compared to those who didn't. And there's quite a difference, let's just say, between the two of those. So I think there's -- first, there's an education opportunity that we're doing right now with those franchisees. I think the other part is, as you know, we've introduced previously, one of the things that we've changed as part of our business review process with franchisees is we now have a discussion around pricing and pricing execution. And so as we're now doing our business reviews with franchisees, which affects things like growth and eligibility from a franchisee standpoint, pricing and pricing noncompliance in certain cases as part of those conversations. So I think the two of those things combined, the actual performance, and it's kind of obvious what should happen out of that as well as this being something that is going to be happening in business reviews, those will be the things that get this fixed. But again, I want to go back to -- we have a very strong degree of alignment with our U.S. franchisees around value leadership. We wouldn't be making the statements that we've been making around not getting beaten on value without that kind of clear strong alignment here. So -- that for me is what gives me confidence because there absolutely is commitment and support for that. There's absolutely a strong belief and recognition that in this environment, in particular, we have to be really sharp on value. But as I've said in my comments a couple of different times now, we absolutely also had a miss in Q2 on how we executed it, and that's what we're working on fixing right now. Dexter Congbalay: Next question from John Ivankoe at JPMorgan. John Ivankoe: The question is on the recent ACSI survey and obviously, kind of McDonald's place in it. So what I'm going to ask you is, I guess, do you, in general, agree with that in terms of, I guess, McDonald's relative to the rest of the industry? And where I want to go with this question is kind of looking at performance of company stores versus franchise stores just from a customer service perspective and even looking within franchisees, if there's an opportunity to maybe move some significant bucket of underperforming from a customer service perspective, franchisees in a better performing, just what kind of mechanics might be involved for you to get certain stores, especially the underperformers in the hands of the right operators. Christopher Kempczinski: Thanks for the question, John. I felt like I knew every industry acronym, but you've stuck me on ICSA. So tell me what that is and what it revealed and then I can answer the question. John Ivankoe: So maybe I screwed up the words. ACSI, the American Customer Satisfaction Index. Christopher Kempczinski: ACSI. Okay. John Ivankoe: I'm sorry, maybe my new speaker box maybe isn't working like I'd like. Christopher Kempczinski: Yes. So I think the survey that you're referencing was around customer satisfaction. Is that accurate? Ian Borden: I think so. Christopher Kempczinski: Okay. Well, I'm going to just assume that, that is accurate. This is obviously something that we track religiously, and we've got all sorts of data on this that goes back longitudinally over time. We have seen -- if you look at over the last several years, we've certainly seen improvements around how consumers are rating the experience that happens in our restaurant. We have a survey that we do with our actual customers who are visiting our restaurants who then give us feedback on performance. So we've seen strong performance, strong improvement on that over time. We certainly, as I referenced in the call, saw a step back on that in Q2, which we're now working at going and addressing. But I guess I'd say more broadly, we think that the environment that we're in now, there's an opportunity for us to always step up the game. And part of what we've been talking about with McDonald's > NEXT is we've got to elevate the taste and quality of the food. We're going to elevate the experience that we're offering our customers. We're going to bring even greater levels of hospitality. So the notion of is there an opportunity for us to continue to improve the experience that we offer in the restaurants, 100%, and that's what we're focused on. But I just would caution, survey data is inherently fraught with peril. It's much better to be actually using survey -- to be using data based on known customers who actually visited the restaurant, which is the data that we use when we track our customer satisfaction. Ian Borden: And John, I might just build on just two things. One, I don't know that we're familiar with the survey you're referencing, but I think we get the point you're trying to make. I would just say we're always looking at putting our restaurants in the hands of the best operators, whether that's company franchise or within franchise because we know clearly that if we're delivering better customer satisfaction across all elements of the metric, we deliver better operating performance and better financial results. And I think that's in our interest, that's in our system's interest to make sure we're always maximizing the opportunity. It also kind of speaks to, I think, what you're hearing us talk about with McDonald's > NEXT, where we're focused on taste and quality and hospitality. Taste and quality, we know are some of the top consumer expectations, meaning that's what they use as a decision criteria when they make choices about which restaurants they visit. And I think that's clearly part of kind of the NEXT strategy that you're going to hear more about from us in September and how we're going to really, I think, demonstrably deliver an elevated outcome across all of those key metrics and what we believe that can do from a performance standpoint as we look forward. Dexter Congbalay: Our next question is from Sara Senatore from Bank of America. Sara Senatore: I guess maybe two quick questions. One is a follow-up to an earlier comment. The first is about -- you mentioned like some of the most aggressive expansion of new restaurants in your history, but also that you're pushing out your 50,000 target. So is it possible that the accelerated pace of growth may have had some impact on same-store sales growth, either because of cannibalization or because of implications for operations, maybe resources redirected away from that? And could that translate into better same-store sales? And I guess just the follow-up question, you've talked a lot about marketing. Historically, McDonald's has been very good, I think, at marketing and anticipating consumer behavior. Has anything changed in terms of, I don't know if it's stage gate or how you think about it just as you sort of -- and whether you'll pivot back to a different process? Ian Borden: So Sara, it's Ian. Let me just maybe take the development question, and then I think Chris will probably want to jump in on your marketing point. I think we've been, I think, pretty consistently clear that, obviously, we continue to believe there is significant opportunity for us to continue to grow the brand and add more restaurant locations. And so you're right, we pushed the 50,000 out slightly into 2028 versus 2027. We talked about that in the Q1 call that we were as always focused on quality, not just quantity. We did the review over the last several months. And I think as you heard me talk about upfront, I think the cumulative inflation that has been disproportionate and significant that we've seen over the last few years, plus the kind of more constrained consumer environment, just simply meant we felt we needed to kind of what I'll call, slightly adjust our pace to make sure that we were going to deliver the right level of returns, which is ultimately, as you've heard Chris and I talk about pretty consistently how we make our decisions on new openings. So I don't think we have changed our perspective on the opportunity that continues to remain from development. We've simply kind of adjusted our pace to reflect the significant changes in the external environment that have happened over the last several years since we announced the original goal. I think it's not a very significant adjustment to pace. So I think your question on comps, for sure, maybe there's a little benefit. I wouldn't expect that to be that meaningful. But I think, as you know, we believe we can do both. I think we are going to continue to get a decent contribution from new store growth. And at the same time, we know we've got to deliver strong comps. And that's the right formula, I think, to ensure because ultimately, our measure that we're guided by is are we taking share in each of the markets relative to kind of the competition around us. And I think we certainly feel confident as we look forward in our ability to continue to do that. Christopher Kempczinski: Yes. And then turning to the marketing question, Sara. There's a lot to cover in that, and that will be something that Morgan Flatley, our Global CMO, will cover more at Investor Day. But let me just make a few comments to try to address that and maybe preview some of what we're thinking. I mean, certainly, one of the great things about McDonald's is we've got, we believe, the best brand in the industry. And we are, we believe, also one of the best, most beloved brands in the world. So we've got sort of this great foundation that's been built over 75-plus years in our system, 70 years plus in our system that we all get the privilege of working on. What's changed pretty dramatically, though, is how consumers react to brands like ours. And when I began my career a long time ago, it was very much -- we would tell the customer about us, and it was television advertising, you would sit down, you would build a marketing campaign at the beginning of the year, and you would basically just go execute that marketing campaign. And the way the world is today, that model doesn't work anymore. And you're seeing the disruption that's happening with advertising agencies, you're seeing a lot of changes there where -- what's changed is it's no longer what we describe as our brand. It's really the customer's brand. And the great thing about the McDonald's brand is people love to engage with our brand. I mean it's, I think, probably the only brand in our industry that can create the amount of talk value. I've learned that firsthand, but the amount of talk value that McDonald's can do is unlike anybody else. And so that, I think, for us gives us a great opportunity, which means it's about engaging even more with creators. It's about how do we actually find ways to let others drive the message, and there's a lot of work that we've been doing around influencers and other things like that, that you're going to hear more about. So when I think about marketing, it's actually not going back to anything, which I think was kind of the nature of your question. It's actually evolving to something different because the world is changing, and we need to change with it. I think more fundamentally, part of what we're thinking about is what are we trying to drive over the long term. And I think we have to be really careful about how many sort of "borrowed" equities we put on the calendar because in many cases, and a borrowed equity would be whether you're doing something with World Cup or you're doing something with Minecraft or Grinch. I mean there's certainly a role for those, but you're not going to promo your way to long-term value creation. You're always going to be having to comp over that. And the more fundamental way that you drive long-term value creation is through baseline growth. And it's through reminding people and showing people the experience that we offer, the food, the taste and quality that we offer. So I think there's an opportunity for us in terms of emphasis of making sure that we're really emphasizing in our marketing communication, the elements that are going to drive long-term baseline volume growth. And periodically punctuating it with borrowed equities, things that can maybe create some cultural moments. But we got to just be really careful about how often we're doing that on the marketing calendar. Operator: Our next question is from David Tarantino from Baird. David Tarantino: My question is related to the current kind of state of the franchise cash flows and their willingness to invest. It seems like a lot of the items you're doing to address the U.S. operations and value and maybe restaurant experience are going to require some investment. So I was hoping you could comment on the degree of difficulty you see in getting that done when franchisee cash flows are under a bit of pressure here. Christopher Kempczinski: Sure. Well, certainly, this is going to be something that we talk a lot more about at Investor Day. And so I don't want to get into too much of the detail here. But I'd say one of the things that I would emphasize is McDonald's > NEXT is not a remodel program. There's a remodel that is part of it, but it's not at its core, a remodel program. It's about all the things that I was talking about, elevating taste and quality in the restaurants, elevating the experience, simplifying the restaurants, et cetera. So as you think about the investment that's required, I think what we've been really thoughtful about on this is there's an investment that happens as part of the regular cadence of remodel activity. Our franchisees every 10 years need to be remodeling the restaurants. It's something that's clear in our franchise agreements. It's something that we've talked about. We just so happen to in the U.S. be coming up on a remodel cycle. It's hard to believe, but we're going to be approaching in the next few years another 10-year remodel cycle. So as we're doing that normal remodel cycle, we're also thinking about are there things that we can do on top of that, that can drive additional opportunities to grow sales and simplify operations. The other thing that we're seeing as part of that is there are, I think, a lot of productivity opportunities for the restaurants as well. And so net-net, when you look at the combination of the financial health of our franchisees in the U.S., which is still quite healthy. When we look at their balance sheets, they've got a lot of borrowing capacity still. When you look at the fact that we're entering into a normal remodel cycle where these investments would have to be made anyway, and we're going to be able to self-fund much of the sales growth improvement ideas through productivity opportunities, I feel very confident that we'll be able to get this thing done. But obviously, a lot more conversation that we'll have on that in the next couple of months. Ian Borden: And David, I might just took on because I know -- I think you were also maybe just talking in the near term on value. But I just -- so I think in the environment we're in where there's certainly kind of continued inflationary pressures on things like food and paper and labor. I mean, I think for always, that's on, I think, the top of mind for our system, for our franchisees, I think you would expect it to be. I just would say, I think the system, as you've heard us say pretty consistently today, is clear and united on the fact that we have to have value for money leadership. We have to do that in ways that are driving baseline momentum, which I think, again, everybody is fully aligned on, and we have to do that, that is driving profitable growth over time. And I think we've demonstrated with the components that we put in place on value like Extra Value Meals that if we do that in a thoughtful way, we're building volume, we're building incremental visits. And ultimately, that's, of course, in everybody's best interest. So I think we've got to continue to kind of get those balances right and make good decisions. But I think this -- I think we've got a good track record there. And of course, we'll continue to engage with our franchisees and get to the right outcomes. Dexter Congbalay: Our next question is from Jon Tower at Citi. Jon Tower: Curious, during the prepared remarks, Chris, you had mentioned that the stores during the second quarter in the U.S. were overwhelmed by too many deployments and that kind of hit you guys on the operations front or the stores on the operations front. I'm just curious if you could dive into that a little bit more and talk about the balance between maybe new product news, which seems to be driving a lot of traffic in the industry these days against perhaps needing to be a little bit more thoughtful around new product news in order to make sure that store ops aren't compromised. Christopher Kempczinski: Sure. I think probably the best way to answer that question is to kind of just put yourself in the shoes of a restaurant manager. So imagine you're running a restaurant and you enter into Q2 and we launched KPop Demon Hunters. So there's a bunch of work that needs to happen to get ready to launch KPop Demon Hunters. We have the KPop Demon Hunters meal. You've got to train your crew on that. You've also got to put up merchandising activity around the restaurant. So you're launching KPop Demon Hunters. Then 3 weeks later, we're asking you to go execute a change to the McValue program, introducing the EDAP menu, and at the same time, a lot of the digital offers that were there aren't there anymore. The Buy One, Add One that was there isn't there anymore. So you can imagine the number of questions that a customer asks as they pull up into the drive-thru or they go to the front counter and they ask, well, where is this deal? I used to get this deal. So now you're having kind of those conversations, and we're doing that for a couple of weeks. And then we launched the beverage platform in early May, which is a whole new range of product. You have to train crew on that. Again, you have to do merchandising in the restaurants. You then have marketing activity that goes with that. And then we're on that for a few weeks before you launch FIFA. So again, if you just put yourself in kind of the shoes of a restaurant manager beyond sort of all the normal day-to-day stuff, that's a lot of things to be throwing at the restaurant. And I think if you also think about it from a customer standpoint, it's tough to break through when you have that many messages out there. You've got a KPop Demon Hunters message, then you have a value message, then you have a beverage message, then you have a FIFA message. It's tough to drive awareness when you're sort of jumping around and giving those, call it, 2, 3 at most 4-week windows. So that's the execution opportunity that I talked about. As I said earlier, we're taking a really hard look at the calendar through the balance of the year. And that doesn't mean that you're not doing new news. It doesn't mean that you're not doing menu ideas, as you mentioned, but you've got to give them space and you've got to go execute it. And if it looks great on paper, but you can't execute it, it doesn't matter. And so that's the scrutiny that we're applying to the calendar for the balance of the year. Operator: Our last question today is from Lauren Silberman at Deutsche. Lauren Silberman: I wanted to ask about beverages and nice to hear about the strong start. Can you comment on what you're seeing there? Are you seeing overall beverage attachment increase for the business, trying to understand the incrementality. I think in test markets, you guys also mentioned energy drinks were the best-performing line. Any color on how much that represented as a percentage of the total new beverage lineup sold? Ian Borden: Lauren, thanks for the question. Well, look, I would just say a few things because obviously, during Q2, we had 3 markets that had launched our new platform, U.S., Canada and Germany, and we've had Australia who has launched in mid-July. I think very consistent results, seeing our results in line or above our kind of initial expectations consistently in all of those markets. I think as you've heard us talk a little bit about previously, more than half of the traffic is coming after lunch. That's really compelling for us because it's at parts of the day where we have lower volume, more capacity. And I think it's a sign that we're getting incrementality as a new occasion because of the beverages. Strong average check because of the strong food attachment that's also going with beverages. Average check is up about 50% over kind of the full day average check. And maybe the example I would use is Germany because that in Q2 was the only market that had the full range. So cold coffee, crafted sodas, refreshers and energy. And we're seeing in Germany, obviously, early days still, but meaningful incrementality to the contribution to overall comp guest counts and comp sales and meaningful impact to kind of average restaurant level cash flow. And I think -- what's important, we'll talk a lot more about this at Investor Day is beverages goes back a little bit to Chris' what he talked about earlier, how do we get these kind of baseline growing platforms in place that are going to give us multiple years of growth opportunity, and that's certainly how we think about our beverage platform and why we're going to continue, obviously, to extend it to other markets as we look forward. Dexter Congbalay: Thank you, everyone, for joining us today. We will -- happy to take follow-up calls later on today and over the next week or so. Please e-mail me if you would like a meeting, and we will talk to you later. Thank you. Operator: This concludes McDonald's Corporation Investor Call. You may now disconnect, and have a great day. Before you buy stock in McDonald's, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and McDonald's wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy. McDonald's (MCD) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Net Revenue: $331 million in the second quarter, down 13% due to planned refranchising of the Western US and Japan. Organic Revenue: Essentially flat when excluding refranchising impacts. System-Wide Sales: $497 million, up 2.6% in constant currency, excluding the impact of the ended McDonald's USA partnership. Adjusted EBITDA: $28.8 million, up 43% year-over-year, marking the fourth consecutive quarter of growth. Adjusted EBITDA Margin: Improved 340 basis points to 8.7%. US Segment Organic Revenue: Increased 0.1%, or up 4.4% excluding the McDonald's impact from last year. US Segment Adjusted EBITDA: Increased 38% to $13.8 million, with margin up 370 basis points to 8%. International Segment Organic Revenue: Decreased 5.1% due to declines in UK and Australia, partially offset by growth in Canada. International Segment Adjusted EBITDA: $14.2 million, down 22% year-over-year due to the refranchising of Japan; margin was 12.1%. Market Development Segment Organic Revenue: Increased 14.4% driven by royalty revenue growth from Middle East, Japan, and Brazil. Market Development Segment Adjusted EBITDA: Increased 117% to $19.4 million; margin decreased to 47.3%. Adjusted Earnings Per Share: Improved $0.12 year-over-year, with about $0.02 of that due to refranchising deals. Net Leverage Ratio: 5.4 times, improved by 1.3 turns versus the end of 2025 and more than 2 turns since last year's second quarter. Free Cash Flow: Improved by more than $100 million in the first half of 2026 compared to the first half of 2025. Capital Expenditures: $16.1 million year-to-date, down 70% versus the first half of 2025. Average Weekly Sales Per Door (US): Approximately $697, an increase of 33% year-over-year. Digital Sales: Grew 8% year-over-year, representing approximately 22% of total US retail sales. New Shops Opened: 59 new shops year-to-date, with all but two opened by franchisees. Full-Year 2026 Guidance: Net revenue of $1.25 billion to $1.35 billion; system-wide sales growth of 2% to 4% in constant currency; adjusted EBITDA of $140 million to $150 million; capital expenditures of $50 million to $60 million. Warning! GuruFocus has detected 3 Warning Signs with DNUT. Is DNUT fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Adjusted EBITDA increased 43% year-over-year, marking the fourth consecutive quarter of growth, with margin expanding 340 basis points to 8.7%. Net leverage ratio improved to 5.4x, down 1.3 turns from year-end 2025 and over 2 turns from the prior year, driven by refranchising and EBITDA growth. CapEx reduced by 70% in the first half of 2026, contributing to a $100 million improvement in free cash flow and supporting the path to positive free cash flow for the year. US fresh delivery average weekly sales per door increased 33% year-over-year to approximately $697, reflecting improved productivity and strategic partner collaboration. Digital sales grew 8% year-over-year, now representing 22% of US retail sales, with loyalty membership reaching nearly 18 million members who visit 30% more frequently. Expanded fresh delivery network by over 200 doors in Q2 and 450 doors year-to-date, with new e-commerce partnerships including target.com, walmart.com, and kroger.com. International franchise expansion remains strong, with three new markets added in 2026 (Netherlands, Estonia, Mauritius) and 59 new shops opened year-to-date, mostly by franchisees. US organic revenue grew 4.4% excluding the McDonald's impact, driven by strong performance in donut shops and digital channels. Outsourcing US logistics has improved cost predictability and operational efficiency, with benefits expected to further enhance margins over time. AI-enabled demand planning platform is being rolled out, expected to reduce out-of-stocks and minimize returns, improving fresh delivery profitability. Net revenue declined 13% year-over-year to $331 million, reflecting the planned refranchising of Western US and Japan, which reduced company-owned revenue. International organic revenue decreased 5.1%, driven by declines in the UK and Australia, partially offset by growth in Canada. International adjusted EBITDA declined 22% year-over-year, with margin down 160 basis points due to the Japan refranchising and mix changes. The UK market faced challenges from door rationalization and extreme hot weather, impacting both sales and profits, though management expects improvement in H2. Adjusted EBITDA guidance midpoint implies only 3% growth for the full year, reflecting the dilutive impact of refranchising deals on reported EBITDA. The company still carries a high net leverage ratio of 5.4x, indicating significant debt levels despite recent improvements. Fresh delivery network utilization remains low at approximately 25%, highlighting underpenetration but also the need for continued investment in partner relationships. The company faces ongoing competitive pressure in the broader dessert and sweets market, though management emphasizes its unique fresh donut positioning. Commodity inflation is expected to be low single-digit, but fuel price increases could offset some logistics outsourcing benefits, requiring careful management. The refranchising strategy, while beneficial for free cash flow, can be dilutive to the income statement, as seen in the current year's revenue and EBITDA declines. Q: When thinking about EBITDA margins, what will be the key margin drivers and where do you see that going over time, especially after completing the outsourcing of delivery? A: Raphael Duvivier (CFO) stated that the company is happy with the turnaround plan, noting that the second quarter results reflect the impact of the Japan and Western US refranchising deals flowing through the P&L. As more deals are completed and the company moves to a more capital-light model, margins are expected to continue increasing and drive more free cash flow. Josh Charlesworth (CEO) added that while the US logistics outsourcing is complete, most of the benefits have not yet come through to the P&L. The company is seeing greater cost certainty and improved service levels, which are currently more than offsetting inflation on gas prices, and expects the margin benefits of the logistics outsourcing to materialize over time. Q: Which of the DFD retailers are performing best right now, and do you continue to have net closures or places you are still rationalizing? A: Josh Charlesworth (CEO) highlighted that the company is working closely with strategic partners like Walmart, Target, Kroger, Publix, Costco, and Sam's Club. The focus is on expanding distribution where conditions are right for sustainable, profitable sales, and improving in-store merchandising and product placement where they already operate. This strategy has led to an increase of about 450 doors in the US so far this year and a more than 30% increase in average weekly sales across the network. He also mentioned recent additions of .com availability with partners like kroger.com, walmart.com, and soon target.com. Q: US organic sales were better than expected, but EBITDA margins could have been stronger. Are there any ramp costs or call-outs this quarter, and what should we model for the second half? A: Josh Charlesworth (CEO) attributed the strong underlying growth in the US (up 4.4% excluding McDonald's) to the popularity of the affordable original glazed donuts, second dozen promotions driving volume and ticket, and a strong cadence of limited time offerings. Raphael Duvivier (CFO) noted that the company is pleased with the US margin results, which nearly doubled compared to the last quarter. He reminded that the second half of the year (Q3 and Q4) is typically stronger, so margins should be higher as the year progresses. Q: Can you provide more color on what is happening in the UK and Australia, and does underperformance make refranchising more attractive or more challenging? A: Raphael Duvivier (CFO) explained that the UK decline is due to door rationalization and extreme hot weather, but the company is confident in the team's turnaround plan for the second half. Regarding refranchising, he reiterated the commitment to finding the right partners for all markets outside the US, including Australia and the UK, and mentioned ongoing work on Canada. The goal is to find partners who can bring capital to grow and develop these markets. Q: After adding 450 doors this year, where do you see current DFD penetration across retailers versus the long-term goal, and how will this change as you focus on profitability? A: Josh Charlesworth (CEO) stated that the company is relatively underpenetrated with strategic partners, currently present in about 30% of their networks. While growth is great, it needs to be sustainable and profitable. The company is focused on ensuring deliveries are locally made for quality and that routes are efficient. They are growing thoughtfully with customers where traffic is high and in-store displays are secured, adding 450 doors this year on top of the 7,500 at the start of the year, with a continued focus on profitable growth. Q: Where does Krispy Kreme position itself amongst the broader space of desserts and sweets, and how has competition changed? A: Josh Charlesworth (CEO) emphasized that Krispy Kreme makes high-quality fresh donuts from scratch, which is unique in the competitive set. He noted that purchases are infrequent (two to three times a year for special occasions), so the focus is on convenience through fresh delivery expansion and digital growth. With loyalty membership reaching 18 million for a 400-shop chain, he believes the company is a unique player and focuses more on ensuring quality and availability rather than worrying about the competition. Q: Can you provide insight into commodity inflation during the quarter and have you begun contracting with suppliers for 2027? A: Raphael Duvivier (CFO) reiterated that the company expects low single-digit commodity inflation. He also noted that the benefits from the fully outsourced logistics are expected to more than offset any potential fuel price increases over the year, leaving the company feeling good about its commodity position. Q: How are your retail doors performing across higher versus lower income ZIP codes? A: Josh Charlesworth (CEO) stated that the overall focus is on offering great value to customers. The popular original glazed donuts are also the most affordable, especially when bought in dozens or double dozens with additional discounts. This strategy is driving volumes, ticket size, and results, ensuring donuts are available to as many people as possible. Q: Guidance stayed the same, but the midpoint of adjusted EBITDA represents 3% growth on a much stronger capital structure. Why was it so important to bring leverage down before moving to the next phase of growth? A: Raphael Duvivier (CFO) explained that the full-year impact of the Japan and Western US refranchising deals creates a lower base for comparison. He emphasized that reducing leverage from 7.5 times a year ago was a priority to enable the right deals that fuel capital-light growth. This strategy is already showing results in places like Brazil, Spain, the Middle East, and Japan, where new partners like Unison are driving growth. Q: Does the existing factory and production footprint support significant growth over the next few years, or will there be a need for additional capital? A: Josh Charlesworth (CEO) stated that in the US, the company operates at about 25% production utilization, leaving plenty of room for growth without incremental capital. Internationally, utilization is higher, but franchisees are supporting expansion, with 59 new shops opened this year and a track to exceed 100 for the full year. He noted that new franchise partners are excited about the capital returns from building the brand, and the number one reason people don't purchase Krispy Kreme is lack of easy access, which presents a significant opportunity For the complete transcript of the earnings call, please refer to the full earnings call transcript.