McDonald's (MCD) 10-K risk factor changes: FY2021 vs FY2020

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

| 110 North Carpenter [removed: Street,] [added: Street, Chicago, Illinois] | | | [removed: Chicago,] | | | [removed: Illinois] | | | | | | 60607 | | |

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [removed: Exchange] Act).

The aggregate market value of [added: the registrant's] common stock held by non-affiliates [removed: of the registrant] as of June 30, [removed: 2020 was $137,233,144,378.][added: 2021: $172,462,195,915.]

The number of shares outstanding of the registrant’s common stock as of January 31, [removed: 2021 was 745,572,145.][added: 2022: 743,584,718.]

Part III of this Form 10-K incorporates information by reference from the registrant’s [removed: 2021] [added: 2022] definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2020.][added: 2021.]

ORGANIZATION OF [removed: OUR] [added: THIS] ANNUAL REPORT ON FORM 10-K

The order and presentation of content in [removed: our] [added: this] Annual Report on Form 10-K ("Form 10-K") differs from the traditional U.S. Securities and Exchange Commission ("SEC") Form 10-K format.

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| | | | | | | About McDonald's | | | [removed: [3](#ie6432d332c1e474ebcfd7a8ae92953e8_13)] [added: [3](#i763292934bfc4351a657f87d3d00c5f6_13)] | | |

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| | | | | | | Risk Factors | | | [removed: [29](#ie6432d332c1e474ebcfd7a8ae92953e8_61)] [added: [28](#i763292934bfc4351a657f87d3d00c5f6_58)] | | |

| | | | | | | Legal Proceedings | | | [removed: [35](#ie6432d332c1e474ebcfd7a8ae92953e8_64)] [added: [34](#i763292934bfc4351a657f87d3d00c5f6_61)] | | |

| | | | | | | Information About [removed: our] [added: Our] Executive Officers | | | [removed: [36](#ie6432d332c1e474ebcfd7a8ae92953e8_70)] [added: [36](#i763292934bfc4351a657f87d3d00c5f6_67)] | | |

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| [removed: | | | | | | Financial] [added: Financial] Statements and Supplementary [removed: Data] [added: Data] | | | [removed: [37](#ie6432d332c1e474ebcfd7a8ae92953e8_76)] | | | [added: | | |]

| | | | | | | Controls and Procedures | | | [removed: [64](#ie6432d332c1e474ebcfd7a8ae92953e8_220)] [added: [64](#i763292934bfc4351a657f87d3d00c5f6_217)] | | |

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| | | | | | | [Exhibits and Financial Statement [removed: Schedules](#ie6432d332c1e474ebcfd7a8ae92953e8_226)] [added: Schedules](#i763292934bfc4351a657f87d3d00c5f6_223)] | | | [removed: [65](#ie6432d332c1e474ebcfd7a8ae92953e8_226)] [added: [65](#i763292934bfc4351a657f87d3d00c5f6_223)] | | |

| | | | | | | Form 10-K Cross-Reference Index | | | [removed: [68](#ie6432d332c1e474ebcfd7a8ae92953e8_229)] [added: [68](#i763292934bfc4351a657f87d3d00c5f6_226)] | | |

All trademarks used herein are the property of their respective [removed: owners.][added: owners and are used with permission.]

The information in this report [removed: includes] [added: contains] forward-looking statements about future events and circumstances and their effects upon revenues, expenses and business opportunities.

Forward-looking statements can also be identified by the use of forward-looking [added: or conditional] words, such as [removed: "could," "should," "continue," "estimate," "forecast," "intend," "look,"] [added: “could,” “should,” “can,” “continue,” “estimate,” “forecast,” “intend,” “look,”] “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” [removed: "remain"] [added: “remain,” “confident”] and [removed: "confident"] [added: “commit”] or similar expressions.

In particular, statements regarding [removed: our] plans, strategies, prospects and expectations regarding [removed: our] [added: the] business and [removed: industry, including those under "2020 Financial Performance", "Strategic Direction", "Outlook", or "Risk Factors"] [added: industry] are forward-looking statements.

They reflect [removed: our] expectations, are not guarantees of performance and speak only as of the [removed: date of this report.][added: dates the statements are made.]

Except as required by law, [removed: we do] [added: McDonald's Corporation does] not undertake to update such forward-looking statements.

Our business results are subject to a variety of risks, including those [removed: considerations or risks] that are [removed: reflected in the "Risk Factors" section, as well as] [added: described below and] elsewhere in our filings with the SEC.

If any of these [removed: considerations or] risks [removed: materialize,] [added: materialize or intensify,] our expectations (or [added: the] underlying assumptions) may change [removed: or not be realized] and our performance may be adversely affected.

[removed: Therefore, you] [added: You] should not rely unduly on [removed: any] forward-looking statements.

McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and [removed: suppliers,] [added: suppliers] are referred to herein as the "System."

McDonald's Corporation believes the format used in this Form 10-K improves readability and better presents how it organizes and manages its business.

| | | | | | | Strategic Direction | | | [9](#i763292934bfc4351a657f87d3d00c5f6_2346) | | |

| | | | | | | Outlook | | | [10](#i763292934bfc4351a657f87d3d00c5f6_28) | | |

| | | | | | | Five-Year Summary | | | [25](#i763292934bfc4351a657f87d3d00c5f6_49) | | |

| | | | | | | Properties | | | [35](#i763292934bfc4351a657f87d3d00c5f6_64) | | |

| | | | | | | [Signatures](#i763292934bfc4351a657f87d3d00c5f6_229) | | | [69](#i763292934bfc4351a657f87d3d00c5f6_229) | | |

Factors that could cause actual results to differ materially from those in the forward-looking statements include those reflected in the Risk Factors section on page 28 of this Form 10-K and elsewhere in McDonald's Corporation's filings with the SEC.

Conventional franchisees

The Company’s DEI strategy reflects its commitment to deliver equitable treatment for all people and includes:

- a recruitment initiative to help increase the number of franchisees from all backgrounds, including historically underrepresented groups;

- best practice sharing with franchisees and suppliers to support them in furthering DEI progress within their own organizations;

While McDonald’s is proud of its more than 65-year history as an employer, this global DEI strategy is designed to facilitate continued growth in how the Company approaches equitable opportunity and its role in catalyzing it across the System and beyond.

The Company is committed to accelerating representation, inclusion and opportunity for historically underrepresented groups, not only within the Company but across the System.

This goal is underscored by the Company's Mutual Commitment to Diversity, Equity and Inclusion, a pledge that invites the Company’s U.S. suppliers to commit to accountability for DEI progress within their own organizations.

Aligned with the

Company's purpose, mission and values, the Mutual Commitment draws on McDonald's size and scale and highlights its opportunity to accelerate meaningful change for employees, franchisees, suppliers, customers and communities.

Also in 2021, the Company launched a franchisee recruitment initiative to help increase the number of franchisees from all backgrounds, including historically underrepresented groups, in the Company's U.S. and International Operated Markets segments.

The Company expects to expand the number of new franchisees through efforts in three areas: recruitment, financing, and ongoing learning and development.

This effort—tailored for each market—will seek to increase ownership opportunities for new talent worldwide, both in terms of the number of individual restaurants owned and the number of qualified franchisees overall.

The Company has committed $250 million in the U.S. over five years to provide alternatives to traditional financing in order to help candidates—who may face socio-economic barriers—join the McDonald’s System.

In order to support this DEI strategy with measurable data and transparent reporting, the Company published its first Diversity Snapshot in December 2021, which included data on employee, Board and franchisee representation and supplier diversity.

As the Company progresses on its journey of accountability and transparency, it will continue to identify opportunities to further enhance its processes for collecting data and reporting measurable progress toward its DEI goals.

In early 2020, in response to the global COVID-19 pandemic, the Company established a framework called Safety+ in order to foster an environment where restaurant crew feel safe and supported, and customers have a variety of choices for contactless order and payment.

Throughout 2021, the Company has continued to make informed decisions and apply appropriate precautionary measures to adapt to new and evolving safety risks, with guidance from expert health authorities in most of the countries in which it operates, as well as the World Health Organization.

All of these efforts build upon the work McDonald’s has been committed to for decades, rooted in its core value of putting its customers and people first.

The Company understands the importance of providing a positive experience and making everyone feel valued, both in its offices and in McDonald's restaurants.

Further, in 2021 the Company announced a newly defined set of Global Brand Standards that extend requirements to all restaurants, whether Company-owned or franchised.

The Global Brand Standards prioritize actions in four areas: harassment, discrimination and retaliation prevention; workplace violence prevention; restaurant employee feedback; and health and safety.

Beginning in 2022, all restaurants will be assessed on the Global Brand Standards in accordance with the applicable McDonald’s market’s business evaluation processes.

As part of its commitment to a respectful workplace environment, the Company recognizes how important it is to provide channels for its employees to report human rights and similar concerns that may violate Company policies and standards.

In 2021, the Company publicly communicated its ongoing commitment to equal pay, which is supported by an annual pay gap analysis that aims to ensure equitable pay practices are consistently implemented and executed across the Company.

The results of the 2021 pay gap analysis showed that the Company has substantially attained equal pay for women globally (99.85%) and that there was no pay gap disfavoring historically underrepresented groups in the U.S. In line with its core values, the Company continuously emphasizes the importance of pay that is competitive, non-discriminatory, performance-based, transparent and compliant with legal and regulatory standards.

eligible employees.

In addition, the Company maintains a Global Food Disposition Policy to help support its suppliers and distributors around the world in disposing of food in alignment with McDonald’s food waste hierarchy, including by enabling food donations wherever possible.

This policy, which aims to avoid food waste and loss while also allowing the System to meet the needs of local communities, is a critical part of the Company's sustainability work and its purpose to feed and foster communities.

The Company monitors environmental regulations and stakeholder expectations in order to be well-positioned to respond in a timely and appropriate manner, as it cannot predict the precise nature of how these matters will continue to evolve.

In recent years, the Company has made significant progress on many of its global goals and commitments.

You can find more information about these initiatives, as well as other environmental sustainability matters, on the “Our Purpose & Impact” section of the Company's website, which is updated periodically as progress and performance updates become available.

Information can also be found in the Company's annual Climate Change, Forests and Water reports submitted to CDP, an organization that helps companies manage their environmental impacts, and in the Company's first Climate Risk & Resiliency Summary.

The Company is conducting and analyzing climate scenario modeling to continue to identify and further understand potential risks and opportunities and is working with expert partners to evaluate the potential significant impacts and implications for the System.

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We believe that our format improves readability and better presents how we organize and manage our business.

| | | | | | | Financial Performance and Strategic Direction | | | [8](#ie6432d332c1e474ebcfd7a8ae92953e8_25) | | |

| | | | | | | Outlook | | | [10](#ie6432d332c1e474ebcfd7a8ae92953e8_31) | | |

| | | | | | | Selected Financial Data | | | [26](#ie6432d332c1e474ebcfd7a8ae92953e8_52) | | |

| | | | | | | Properties | | | [35](#ie6432d332c1e474ebcfd7a8ae92953e8_67) | | |

| | | | | | | [Signatures](#ie6432d332c1e474ebcfd7a8ae92953e8_232) | | | [69](#ie6432d332c1e474ebcfd7a8ae92953e8_232) | | |

Effective January 1, 2019, McDonald's changed its global operating structure.

- General

As both royalty revenues and the Company's share of net results in equity investments are based on sales results, the Company may continue to experience a negative impact to revenues and Equity in earnings of unconsolidated affiliates as a result of COVID-19 in the near term.

The Company has quality centers around the world designed to promote consistency of its high standards.

Independently owned and operated distribution centers, approved by the Company, distribute products and supplies to McDonald’s restaurants.

In addition, restaurant personnel are trained in the proper storage, handling and preparation of food for customers.

As a result of the COVID-19 pandemic, the Company implemented a framework called Safety+ for enhanced hygiene and safety standards to help re-enforce customer and crew safety.

Additionally, the Company worked closely with suppliers on contingency planning for continuous supply so that we were able to continue to operate safe restaurants, and we had no breaks in supply for food, packaging, toys or equipment globally throughout 2020 due to COVID-19.

The Company monitors environment-related governmental initiatives and consumer preferences, and while we cannot predict the precise nature of how these may evolve, the Company plans to respond in a timely and appropriate manner.

The Company also discloses the impacts of environmental risks and opportunities in its annual CDP Climate Change, CDP Forests and CDP Water reports.

In recent years, we have made significant progress on our global commitments where we can make a difference at scale and drive industry-wide change.

Actual or perceived effects of changes in climate, weather patterns, water resources, forests or other natural resources, or packaging waste could have a direct or indirect impact on the operations of the System in ways which we cannot fully predict at this time.

These government restrictions negatively impacted the Company's revenues.

- *Core values* that define who we are and how we run our business.

Our website is not deemed incorporated by reference into this Annual Report on Form 10-K, but does provide background for reference.

Our Board of Directors reflects this commitment as half of the 12 members are women or racially diverse, including the Chairman of the Board.

The Company’s enhanced DEI strategy builds on existing initiatives from across the business, including:

- long-standing work designed to encourage franchisees and suppliers to create greater diversity in their own operations,

While McDonald’s is proud of our more than 65-year history as an employer, we expect our global DEI strategy to represent a step change in how we view equitable opportunity across our System and we are committed to accelerating the representation, inclusion and opportunity for historically underrepresented groups throughout our business.

Aligned with our purpose, mission and values, this strategy will shape our future as a leading employer.

Throughout 2020, in response to the global COVID-19 pandemic, we have made informed decisions with the guidance from health ministries in most of the countries in which we operate, as well as the World Health Organization.

As safety, hygiene and customers’ trust and confidence in our restaurants is critical in this environment, the Company has established even greater discipline in restaurant operations to meet those needs.

Over the last year, elevated standards informed by this engagement have been executed in the majority of McDonald’s over 39,000 restaurants, including more than 50 process changes in U.S. restaurants.

Encompassed in a framework called Safety+, this effort builds on the Company’s history of safety-first leadership in McDonald’s restaurants, and supplements the work of global markets to help keep customers and crew safe.

We understand the importance of providing a positive experience in our offices and in the restaurants where everyone is valued.

Additionally, we recognize that developing respectful workplaces, where everyone’s rights are recognized, is an ongoing process that requires continuous effort and improvement.

That’s why we worked with third party experts to strengthen our U.S. discrimination, harassment and anti-retaliation policy and provide enhanced interactive training for corporate staff and U.S. Company-owned restaurant employees.

We have shared this policy and training with our franchisees and encourage them to utilize these tools and resources.

We also recognize how important it is to provide channels for employees to report human rights concerns.

In 2020, the Company placed a significant emphasis on wellbeing globally, deploying a multitude of new benefits focused on the physical, financial and mental health of our employees.

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(a) - Incorporated herein by reference from the Company's definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2020.][added: 2021.]

McDonald's Corporation [removed: 2020] [added: 2021] Annual Report 68

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in [removed: their] [added: the] capacities indicated below on the [removed: 23rd] [added: 24th] day of February, [removed: 2021:][added: 2022:]

| | | | *Corporate [added: Senior] Vice President – [removed: Chief Accounting Officer*] [added: Corporate Controller*] | | | | | | *Director* | | |

McDonald's Corporation [removed: 2020] [added: 2021] Annual Report 69

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