McDonald's (MCD) 10-K risk factor changes: FY2022 vs FY2021

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

| [removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)] [added: charter)] | | | | | | | | |

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

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ [added: Smaller reporting company ☐ Emerging growth company ☐]

The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, [removed: 2021: $172,462,195,915.][added: 2022: $181,588,534,180.]

The number of shares outstanding of the registrant’s common stock as of January 31, [removed: 2022: 743,584,718.][added: 2023: 731,496,951.]

Part III of this Form 10-K incorporates information by reference from the registrant’s [removed: 2022] [added: 2023] definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

| | | | | | | Forward-Looking Statements | | | [removed: [3](#i763292934bfc4351a657f87d3d00c5f6_10)] [added: [3](#i6d278eb3cca24d478428bd1e8807ef56_10)] | | |

| | | | | | | About McDonald's | | | [removed: [3](#i763292934bfc4351a657f87d3d00c5f6_13)] [added: [3](#i6d278eb3cca24d478428bd1e8807ef56_13)] | | |

| | | | | | | Business Summary | | | [removed: [3](#i763292934bfc4351a657f87d3d00c5f6_16)] [added: [3](#i6d278eb3cca24d478428bd1e8807ef56_16)] | | |

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[removed: | | | | | | | Financial Performance | | | [8](#i763292934bfc4351a657f87d3d00c5f6_25) | | |][added: 2022 FINANCIAL PERFORMANCE]

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| | | | | | | Other Matters | | | [removed: [24](#i763292934bfc4351a657f87d3d00c5f6_43)] [added: [24](#i6d278eb3cca24d478428bd1e8807ef56_43)] | | |

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[removed: | | | | | | | Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | | | [27](#i763292934bfc4351a657f87d3d00c5f6_55) | | |][added: MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES]

| | | | | | | Risk Factors | | | [removed: [28](#i763292934bfc4351a657f87d3d00c5f6_58)] [added: [27](#i6d278eb3cca24d478428bd1e8807ef56_58)] | | |

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| | | | | | | Information About [removed: Our] [added: our] Executive Officers | | | [removed: [36](#i763292934bfc4351a657f87d3d00c5f6_67)] [added: [34](#i6d278eb3cca24d478428bd1e8807ef56_67)] | | |

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| | | | | | | Controls and Procedures | | | [removed: [64](#i763292934bfc4351a657f87d3d00c5f6_217)] [added: [62](#i6d278eb3cca24d478428bd1e8807ef56_217)] | | |

| | | | | | | Security Ownership of Certain Beneficial Owners and Management and Related [removed: Shareholder] [added: Stockholder] Matters | | | [removed: [64](#i763292934bfc4351a657f87d3d00c5f6_220)] [added: [62](#i6d278eb3cca24d478428bd1e8807ef56_220)] | | |

| | | | | | | [Exhibits and Financial Statement [removed: Schedules](#i763292934bfc4351a657f87d3d00c5f6_223)] [added: Schedules](#i6d278eb3cca24d478428bd1e8807ef56_223)] | | | [removed: [65](#i763292934bfc4351a657f87d3d00c5f6_223)] [added: [63](#i6d278eb3cca24d478428bd1e8807ef56_223)] | | |

| | | | | | | Form 10-K Cross-Reference Index | | | [removed: [68](#i763292934bfc4351a657f87d3d00c5f6_226)] [added: [65](#i6d278eb3cca24d478428bd1e8807ef56_226)] | | |

| | | | | | | [removed: [Signatures](#i763292934bfc4351a657f87d3d00c5f6_229)] [added: [Signatures](#i6d278eb3cca24d478428bd1e8807ef56_229)] | | | [removed: [69](#i763292934bfc4351a657f87d3d00c5f6_229)] [added: [66](#i6d278eb3cca24d478428bd1e8807ef56_229)] | | |

The information in this [removed: report] [added: Form 10-K] contains forward-looking statements about future events and circumstances and their effects upon revenues, expenses and business opportunities.

Generally speaking, any statement in this [removed: report] [added: Form 10-K] not based upon historical fact is a forward-looking statement.

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

In particular, statements regarding [added: the Company's] plans, strategies, prospects and expectations regarding [removed: the] [added: its] business and [removed: industry] [added: industry, as well as environmental, social and governance ("ESG") and similar commitments,] are forward-looking statements.

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 [removed: 28] [added: [27](#i6d278eb3cca24d478428bd1e8807ef56_58)] of this Form 10-K and elsewhere in [removed: McDonald's Corporation's] [added: the Company's] filings with the SEC.

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

For the year ended December 31, [removed: 2021,] [added: 2022,] there were no material changes to the Company's corporate structure or in its method of conducting business.

Refer to the Segment and Geographic Information section on page [removed: 50] [added: [48](#i6d278eb3cca24d478428bd1e8807ef56_169)] of this Form 10-K for additional information.

The Company franchises and operates McDonald’s restaurants, which serve a locally relevant menu of quality food and beverages in communities across [removed: 119] [added: more than 100] countries.

Of the [removed: 40,031] [added: 40,275] McDonald's restaurants at year-end [removed: 2021, 37,295, or 93%,] [added: 2022, approximately 95%] were franchised.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐

| | | | | | | Strategic Direction | | | [9](#i6d278eb3cca24d478428bd1e8807ef56_2295) | | |

| | | | | | | Outlook | | | [10](#i6d278eb3cca24d478428bd1e8807ef56_28) | | |

| | | | | | | Stock Performance Graph | | | [25](#i6d278eb3cca24d478428bd1e8807ef56_46) | | |

| | | | | | | Properties | | | [33](#i6d278eb3cca24d478428bd1e8807ef56_64) | | |

The Company’s people strategies aim to create an environment grounded in diversity, equity, and inclusion (“DEI”).

To reinforce the importance of the Company’s values, the Company’s incentive plan includes quantitative human capital metrics that hold executives accountable for making progress on DEI goals.

In addition, in 2022, the Company introduced an owner/operator diversity metric into its incentive plan for certain key officers and managing directors.

For more information on employee, Board and franchisee representation, as well as diverse-owned supplier spend and equal pay, see the Company's Global Diversity, Equity, and Inclusion Report, including the Diversity Snapshot.

Results of the 2022 pay gap analysis showed that women globally in Company owned and operated markets were paid 99.91 cents on the dollar in base pay on average of what men were paid for similar work.

Further, there was no base pay gap disfavoring underrepresented groups in the U.S. These results indicate the Company substantially attained equal pay, and by the end of the first quarter of 2023, intends to close the small gaps identified in line with the commitment to close pay gaps identified in annual equal pay analyses.

Learning and development is a competitive advantage to McDonald’s and a true differentiator to its employee value proposition.

The Company continues to bring its Community Impact strategy to life through enhanced support efforts because its business thrives when communities thrive.

As a System, McDonald’s creates opportunities that encourage Company employees, franchisees and their employees, suppliers and customers to get involved in philanthropic and volunteering opportunities.

These are areas of increasing importance to the Company and its stakeholders and where the Company believes it can have a significant impact and help to drive industry-wide change.

The Company monitors and manages the evolving environmental landscape to further understand potential risks and opportunities for the business in collaboration with expert partners.

As discussed under “Legal Proceedings – Government Regulations” on page [33](#i6d278eb3cca24d478428bd1e8807ef56_61) of this Form 10-K, governments have adopted laws and regulations involving various aspects of the restaurant business, including, but not limited to, advertising, franchising, health, safety, environment, competition, zoning, employment and taxation.

In addition, during the last three years, markets experienced varying levels of governmental restrictions on restaurant operations in response to the COVID-19 pandemic, including restrictions related to operating hours, dine-in capacity, and dining room and restaurant closures.

These restrictions affected the Company’s revenues for all three years, with a more limited impact in 2022 due to the lesser extent of the restrictions.

While costs associated with legal and regulatory compliance have increased along with the number and scope of laws and regulations affecting our business, these costs are not expected to have a material effect on the Company’s capital expenditures, earnings or competitive position.

Restaurants in Russia were treated as permanently closed as of April 1, 2022 and therefore excluded from the calculation of comparable sales and comparable guest counts beginning in the second quarter of 2022.

- Comparable sales in the International Developmental Licensed segment increased 16.0%, reflecting positive comparable sales across the segment, led by Japan and Brazil, partly offset by negative comparable sales in China due to continued COVID-19 related government restrictions.

Earnings and cash flow growth rates presented below were impacted in 2022 by charges from the sale of the Company's business in Russia, the settlement of a tax audit in France and a gain on the sale of the Company's Dynamic Yield business.

Additionally, 2021 results were impacted by gains on the Company's sale of McDonald's Japan stock, the remeasurement of deferred taxes as a result of a change in the U.K. statutory income tax rate and charges from the sale of McD Tech Labs.

Enhancements to the Strategy include the additions of Restaurant Development to the MCD growth pillars and an internal effort, *Accelerating the Organization*, both of which are aimed at elevating the Company’s performance.

This is exemplified by campaigns that elevate the entire brand, such as the Famous Orders platform that has been repeatedly adopted by markets across the globe, the FIFA World Cup campaign that debuted in 75 markets, the UK’s Raise Your Arches campaign that was picked up by 30 markets around the globe and The Cactus Plant Flea Market Box in the U.S. The Company is committed to a marketing strategy that highlights value at every tier of the menu, as affordability remains a cornerstone of the McDonald’s brand and is especially important to our customers in uncertain economic environments.

Around the world, McDonald’s possesses 10 of these "billion-dollar brand equities." The Company will continue to improve on its classics by implementing a series of operational and formulation changes designed to deliver hotter, juicer, tastier burgers across the globe.

While leaning into core icons like Chicken McNuggets, ongoing focus will include scaling emerging equities such as the McSpicy and McCrispy Chicken Sandwiches.

As of December 31, 2022, the Company’s loyalty customers have proven to be highly engaged, with nearly 50 million active loyalty members across the top six markets in the last 90 days, including 28 million in the U.S.

This capability is now available in the U.S., the U.K., Canada and Australia.

The Company has also put in place long-term strategic partnerships with UberEats, DoorDash, Just Eat Takeaway.com and Deliveroo.

These partnerships are expected to benefit the Company, its customers and franchisees by optimizing operational efficiencies and creating a seamless customer experience.

◦Restaurant Development: The Company will accelerate the pace of restaurant openings with the recent addition of this component to the MCD growth pillars.

In 2023, the Company plans to open approximately 1,900 new restaurant units across the globe, which will contribute to nearly 4% net unit growth.

The Company believes there is opportunity for further growth in many of its largest markets and to explore new formats under the McDonald’s brand over the coming years.

FOUNDATION

- Running Great Restaurants: The Company offers the speed, choice and personalization that its customers expect and serves delicious food people feel good about eating, with convenient locations and hours and affordable prices.

- Empowering our People: The Company believes the employee experience is critical to its success and, in 2022, implemented Global Brand Standards which are designed to create a culture of safety for both employees and customers in McDonald’s restaurants around the world.

- Accelerating the Organization: The Company will unlock further growth as it modernizes the way it works by focusing on becoming faster, more innovative and more efficient at solving problems for its customers and people.

Smaller reporting company ☐ Emerging growth company ☐

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

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

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

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

Conventional franchisees

- *Purpose* to feed and foster communities;

- *Mission* to create delicious feel-good moments for everyone; and

At McDonald's, we are guided by our five core values:

Beginning in 2021, the Company began incorporating quantitative representation metrics for leadership into the calculation of annual incentive compensation for its executives.

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.

Workplace Health and Safety

McDonald’s has always focused on protecting the health and safety of its people and customers.

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.

Further, the Company continued its engagement of Mayo Clinic, a global leader in serious and complex healthcare, to provide ongoing counsel and expertise on emerging science in infection prevention and control, and to identify best practices to help protect restaurant crew and customers.

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.

In 2018, the Company introduced McDonald's Human Rights Policy, which outlines its commitment to respect its people and their rights.

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.

eligible employees.

These are just a few examples of the important role education plays in the Company's business and the communities McDonald's serves.

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.

In measuring the Company’s competitive position, management reviews data compiled by Euromonitor International, a leading source of market data with respect to the global restaurant industry.

The Company measures itself using the informal eating out ("IEO") segment information, which is inclusive of the Company’s primary competition of quick-service restaurants.

The IEO segment excludes establishments that primarily serve alcohol and full-service restaurants other than providers with limited table service.

Based on data from Euromonitor International, the global IEO segment was composed of approximately 10 million outlets and generated $1 trillion in annual sales in 2020, the most recent year for which data is available.

In 2020, McDonald’s Systemwide restaurant business accounted for 0.4% of those outlets and 9.3% of those sales.

Management also on occasion benchmarks McDonald’s against the entire restaurant industry, including the IEO segment defined above and all full-service restaurants.

Based on data from Euromonitor International, the restaurant industry was composed of approximately 19 million outlets and generated $2 trillion in annual sales in 2020.

In 2020, McDonald’s Systemwide restaurant business accounted for 0.2% of those outlets and 4.6% of those sales.

Throughout 2020 and 2021, markets experienced varying levels of government restrictions on restaurant operating hours, limited dine-in capacity, dining room closures and, primarily in 2020, some instances of full restaurant closures.

These government restrictions affected the Company's revenues for both periods, with results for 2021 reflecting recovery due to the greater impact of COVID-19 restrictions in 2020.

The Company does not believe that compliance with other current government regulations will have a material effect on the Company's capital expenditures, earnings or competitive position.

- Comparable sales in the International Developmental Licensed segment increased 16.6%, reflecting positive comparable sales across all geographic regions.

| | | | Additional Item | | | Information About our Executive Officers | | | Page 36 | | |

| Signatures | | | | | | | | | Page [removed: 69] [added: 66] | | |

(a) - [removed: Incorporated] [added: The information required by this item is incorporated] herein by reference from the Company's definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

McDonald's Corporation [removed: 2021] [added: 2022] Annual Report [removed: 68][added: 65]

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 the capacities indicated below on the 24th day of February, [removed: 2022:][added: 2023:]

| | | | [removed: *Director* | | | | | |] *Corporate Executive Vice President and Chief Financial Officer* | | | [added: | | | *President, Chief Executive Officer and Director* | | |]

| | | | [added: *(Principal Financial Officer)*] | | | | | | *(Principal [removed: Financial] [added: Executive] Officer)* | | |

| *By* | | | /s/ Enrique Hernandez, Jr. | | | *By* | | | /s/ [removed: John W. Rogers, Jr.] [added: Miles D. White] | | |

| | | | Enrique Hernandez, Jr. | | | | | | [removed: John W. Rogers, Jr.] [added: Miles D. White] | | |

| *By* | | | /s/ Catherine [removed: Hoovel] [added: M. Engelbert] | | | *By* | | | /s/ Paul S. Walsh | | |

| | | | Catherine [removed: Hoovel] [added: M. Engelbert] | | | | | | Paul S. Walsh | | |

| | | | *Corporate Senior Vice President [removed: –] [added: -] Corporate Controller* | | | | | | [removed: *Director*] | | |

McDonald's Corporation [removed: 2021] [added: 2022] Annual Report [removed: 69][added: 66]

| *By* | | | /s/ Ian F. Borden | | |

| | | | Ian F. Borden | | |

| | | | February 24, 2023 | | |

| *By* | | | /s/ Ian F. Borden | | | *By* | | | /s/ Christopher J. Kempczinski | | |

| | | | Ian F. Borden | | | | | | Christopher J. Kempczinski | | |

| *By* | | | /s/ Anthony G. Capuano | | | *By* | | | /s/ Richard H. Lenny | | |

| | | | Anthony G. Capuano | | | | | | Richard H. Lenny | | |

| *By* | | | /s/ Kareem Daniel | | | *By* | | | /s/ John J. Mulligan | | |

| | | | Kareem Daniel | | | | | | John J. Mulligan | | |

| *By* | | | /s/ Lloyd H. Dean | | | *By* | | | /s/ John W. Rogers, Jr. | | |

| | | | Lloyd H. Dean | | | | | | John W. Rogers, Jr. | | |

| *By* | | | /s/ Robert A. Eckert | | | *By* | | | /s/ Jennifer L. Taubert | | |

| | | | Robert A. Eckert | | | | | | Jennifer L. Taubert | | |

| | | | *Director* | | | | | | *Director* | | |

| | | | *Director* | | | | | | *Director* | | |

| *By* | | | /s/ Margaret H. Georgiadis | | | *By* | | | /s/ Amy E. Weaver | | |

| | | | Margaret H. Georgiadis | | | | | | Amy E. Weaver | | |

| | | | *Director* | | | | | | *Director* | | |

| | | | | | | | | | | | |

| *By* | | | /s/ Catherine Hoovel | | | | | | | | |

| | | | Catherine Hoovel | | | | | | | | |

| *By* | | | /s/ Kevin M. Ozan | | |

| | | | Kevin M. Ozan | | |

| | | | February 24, 2022 | | |

| *By* | | | /s/ Lloyd H. Dean | | | *By* | | | /s/ Richard H. Lenny | | |

| | | | Lloyd H. Dean | | | | | | Richard H. Lenny | | |

| *By* | | | /s/ Robert A. Eckert | | | *By* | | | /s/ John J. Mulligan | | |

| | | | Robert A. Eckert | | | | | | John J. Mulligan | | |

| *By* | | | /s/ Catherine M. Engelbert | | | *By* | | | /s/ Kevin M. Ozan | | |

| | | | Catherine M. Engelbert | | | | | | Kevin M. Ozan | | |

| *By* | | | /s/ Margaret H. Georgiadis | | | *By* | | | /s/ Sheila A. Penrose | | |

| | | | Margaret H. Georgiadis | | | | | | Sheila A. Penrose | | |

| *By* | | | /s/ Christopher J. Kempczinski | | | *By* | | | /s/ Miles D. White | | |

| | | | Christopher J. Kempczinski | | | | | | Miles D. White | | |

| | | | *President, Chief Executive Officer and Director* | | | | | | *Director* | | |

| | | | *(Principal Executive Officer)* | | | | | | | | |