McDonald's Corporation delivered solid first-quarter 2026 results, with global comparable sales rising 3.8% and U.S. comparable sales increasing 3.9% year over year, highlighting continued consumer demand despite a challenging operating environment.
The fast-food giant generated more than $3.6 billion in restaurant margins and posted an adjusted operating margin of 46%. However, management acknowledged that margins at company-operated restaurants in the United States were “not acceptable,” signaling growing concern over profitability trends within directly owned locations.
Executives said weaker margins were mainly driven by higher labor investments and restrained menu pricing, which reduced the company’s ability to offset rising costs. While management described these issues as manageable, it emphasized that company-operated stores must deliver strong returns to justify their role within the broader system.
The comments have renewed investor focus on McDonald’s ownership structure as a possible profitability lever. The company’s heavily franchised business model has historically supported stable margins and strong cash flow, making the weaker performance of company-operated stores more noticeable.
Management noted that franchisee-operated restaurants are currently delivering stronger restaurant-level margins, raising the possibility of either improved internal execution or a reassessment of the balance between franchised and company-owned stores.
Despite the margin concerns, McDonald’s sales momentum remains supported by value-focused offerings, marketing campaigns and menu innovation. Investors are now expected to closely monitor whether management can improve profitability through pricing discipline, operational efficiencies or ownership-mix adjustments.
Shares of McDonald's Corporation have fallen 12.6% over the past year, underperforming several industry peers. During the same period, Starbucks Corporation gained 21.9%, while Sweetgreen, Inc. and Chipotle Mexican Grill, Inc. declined 54.7% and 38.3%, respectively.
From a valuation perspective, McDonald’s trades at a forward price-to-sales ratio of 6.69, significantly above the restaurant industry average of 3.30. Starbucks, Sweetgreen and Chipotle currently trade at lower forward P/S multiples of 3.08, 1.13 and 3.06, respectively.
Analysts also noted that the Zacks Consensus Estimate for McDonald’s 2026 earnings per share has declined over the past 30 days, reflecting some caution around near-term profitability.
Still, earnings growth expectations remain positive. McDonald’s is projected to deliver 6.2% earnings growth in 2026, while Starbucks and Sweetgreen are expected to post stronger gains of 12.2% and 107%, respectively. Meanwhile, Chipotle’s 2026 earnings are projected to decline 3.4% year over year.
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