McDonald'sWide moat

McDonald's barely sells hamburgers. About 95% of its roughly 45,000 restaurants belong to franchisees who buy the food, hire the staff and take the operating risk; the corporation collects a royalty on their sales and, in most cases, rent on the ground beneath them. That is why the two numbers that describe this company are so far apart. The system sold about $139.4 billion of food in 2025 — that is what customers actually spent — while McDonald's Corporation booked $26.9 billion of revenue¹. The first number is the empire; the second is the toll.

Look at how the toll arrives and the business model is obvious: $16.5 billion of franchised revenue — royalties plus rent — against $9.7 billion from the shrinking minority of restaurants McDonald's still operates itself. Franchised revenue costs almost nothing to produce, which is how a burger chain runs a 46.1% operating margin, a figure closer to a software company than a restaurant. By geography the split is nearly even between the United States ($11.0 billion of revenue) and the International Operated Markets ($12.9 billion — Britain, France, Germany, Canada, Australia), with the mostly-licensed developmental markets, including China and Japan, adding about $3.0 billion.

The revenue chart tells a story that looks like decline and is nothing of the kind: reported revenue fell from $25.4 billion in 2015 to $19.2 billion in 2020 because McDonald's deliberately sold company-run restaurants to franchisees, trading low-margin sales for high-margin royalties². Fewer dollars, better dollars — and behind them, a real estate portfolio that makes McDonald's one of the largest property owners on the planet.

What that machine produces is remarkable consistency: $8.6 billion of net income, $11.95 of earnings per share, and a 49th consecutive annual dividend increase. What it is producing right now is a stall. Second-quarter 2026 revenue rose 4%, but global comparable sales decelerated to +1.3% — the United States managed +0.8% — against +3.8% a year earlier³, as low-income customers cut back on eating out. The market has repriced accordingly: about $167 billion of market value, roughly 19 times earnings and a 3.3% yield⁴, cheaper than this company usually trades.

That gap — a fortress franchise with a stalling customer — is the question the following pages take up. The Moat weighs the brand, the franchise system, the landlord model and the scale that make the tolls so durable; the Future Bets follow the 5,000 new restaurants, the beverage menu, the 250-million-member loyalty file and the computers going into the kitchens — the four things meant to get that comparable-sales line moving again. Its three segments are taken in turn in The Revenue Lines.