New York (AFP) – McDonald’s unveiled plans Wednesday to steer $8.5 billion to franchisees for restaurant remodels and technology upgrades as it prepares for an inflation-challenged consumer economy for the foreseeable future. Executives pitched the franchisee support plan, which will run through 2036, as its best course to reignite growth in its home market, where sales have slowed as US consumers struggle with lofty prices for gasoline and other household items.
“When franchisees have stronger economics, our system is stronger,” Chief Financial Officer Ian Borden said as he outlined measures including rent relief and capital support. Besides touting new offerings in chicken, coffee, and other menu areas, a series of presentations from company officials highlighted the company’s plans to incorporate artificial intelligence to speed ordering and improve inventory and supply chain management. McDonald’s said the initiative, dubbed its “Next” plan, would translate into about 2.5 percent restaurant-level efficiency gains.
But shares fell sharply throughout the presentation, during which Borden also said US sales in the current quarter are on track to be “slightly negative.” Chief Executive Chris Kempczinski spoke to broadcaster CNBC, describing inflation as “sticky, not just in the US, but around the world.” In such an environment, the company aims to grow market share through the nuts and bolts, “the foundation of improving taste and quality of the food that we serve,” the CEO told analysts. The company is also seeking to sharpen its value offering to cash-strapped consumers through meal packages and digital promotions.
The chain’s first investor day in three years comes after it reported annual US comparable sales growth of just 0.2 percent in 2024 and 2.1 percent in 2025. Asked if he could return McDonald’s annual growth in its home market to its historic average of around three or four percent, Kempczinski said: “Yes, absolutely.” The franchisee investments aim to cushion the financial hit to small businesses that can face price tags as much as $450,000 to remodel the lobby in US restaurants.
The Next plan envisions additional investments, taking the total to around $800,000 in US restaurants, “to be phased in over time,” Borden said of the plan. McDonald’s US restaurants are overwhelmingly franchised. In 2025, more than 60 percent of global revenues were from franchised stores. Shares of McDonald’s fell 6.4 percent after midday.
© 2024 AFP
