McDonald's (MCD) 10-K risk factor changes: FY2025 vs FY2024

For the fiscal year ended December 31, [removed: 2024][added: 2025]

[removed: ][added: ]

The aggregate market value of the registrant's common stock held by non-affiliates as of June [removed: 28, 2024: 182,778,968,633.][added: 30, 2025: 208,464,334,129.]

The number of shares outstanding of the registrant’s common stock as of January 31, [removed: 2025: 714,461,139.][added: 2026: 710,398,642.]

Part III of this Form 10-K incorporates information by reference from the registrant’s [removed: 2025] [added: 2026] definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2024.][added: 2025.]

| | | | | | | [removed: 2024] [added: 2025] Financial Performance | | | [8](#i6d278eb3cca24d478428bd1e8807ef56_25) | | |

| | | | | | | Cash Flows | | | [removed: [21](#i6d278eb3cca24d478428bd1e8807ef56_37)] [added: [19](#i6d278eb3cca24d478428bd1e8807ef56_37)] | | |

| | | | | | | Financial Position and Capital Resources | | | [removed: [23](#i6d278eb3cca24d478428bd1e8807ef56_40)] [added: [22](#i6d278eb3cca24d478428bd1e8807ef56_40)] | | |

| | | | | | | Other Matters | | | [removed: [25](#i6d278eb3cca24d478428bd1e8807ef56_43)] [added: [24](#i6d278eb3cca24d478428bd1e8807ef56_43)] | | |

| | | | | | | Other Key Information | | | [removed: [26](#i6d278eb3cca24d478428bd1e8807ef56_46)] [added: [25](#i6d278eb3cca24d478428bd1e8807ef56_46)] | | |

| | | | | | | Stock Performance Graph | | | [removed: [26](#i6d278eb3cca24d478428bd1e8807ef56_46)] [added: [25](#i6d278eb3cca24d478428bd1e8807ef56_46)] | | |

| | | | | | | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | [removed: [27](#i6d278eb3cca24d478428bd1e8807ef56_55)] [added: [26](#i6d278eb3cca24d478428bd1e8807ef56_55)] | | |

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

| | | | | | | Cybersecurity | | | [removed: [35](#i6d278eb3cca24d478428bd1e8807ef56_2510)] [added: [34](#i6d278eb3cca24d478428bd1e8807ef56_2510)] | | |

| | | | | | | Legal Proceedings | | | [removed: [37](#i6d278eb3cca24d478428bd1e8807ef56_61)] [added: [36](#i6d278eb3cca24d478428bd1e8807ef56_61)] | | |

| | | | | | | Properties | | | [removed: [37](#i6d278eb3cca24d478428bd1e8807ef56_64)] [added: [36](#i6d278eb3cca24d478428bd1e8807ef56_64)] | | |

| | | | | | | Information About our Executive Officers | | | [removed: [38](#i6d278eb3cca24d478428bd1e8807ef56_67)] [added: [37](#i6d278eb3cca24d478428bd1e8807ef56_67)] | | |

| | | | | | | Availability of Company Information | | | [removed: [39](#i6d278eb3cca24d478428bd1e8807ef56_70)] [added: [38](#i6d278eb3cca24d478428bd1e8807ef56_70)] | | |

| | | | | | | Financial Statements and Supplementary Data | | | [removed: [39](#i6d278eb3cca24d478428bd1e8807ef56_73)] [added: [38](#i6d278eb3cca24d478428bd1e8807ef56_73)] | | |

| | | | | | | Controls and Procedures | | | [removed: [69](#i6d278eb3cca24d478428bd1e8807ef56_217)] [added: [68](#i6d278eb3cca24d478428bd1e8807ef56_217)] | | |

| | | | | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | [removed: [69](#i6d278eb3cca24d478428bd1e8807ef56_220)] [added: [68](#i6d278eb3cca24d478428bd1e8807ef56_220)] | | |

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

For the year ended December 31, [removed: 2024,] [added: 2025,] 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: [52](#i6d278eb3cca24d478428bd1e8807ef56_169)] [added: [51](#i6d278eb3cca24d478428bd1e8807ef56_169)] of this Form 10-K for additional information.

Of the [removed: 43,477] [added: 45,356] McDonald's restaurants at year-end [removed: 2024,] [added: 2025,] approximately 95% were franchised.

In addition, [removed: there is] the International Developmental Licensed Markets & Corporate [removed: segment, which] includes the results of over 75 countries as well as Corporate activities.

One of the strengths of the franchising model is that the expertise from Company-owned and operated restaurants allows McDonald’s to improve the operations and success of all [removed: restaurants while] [added: restaurants, and allows] innovations from franchisees [removed: can] [added: to] be tested and, when viable, efficiently implemented across relevant restaurants.

The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology [removed: platforms,] [added: and digital platforms and] revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s [removed: brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.][added: brand.]

McDonald's Corporation [removed: 2024] [added: 2025] Annual Report 3

While developmental license and affiliate arrangements are largely the same, affiliate arrangements are used in a limited number of foreign markets (primarily China and Japan) within the International Developmental Licensed [removed: Markets & Corporate segment] [added: Markets,] as well as a limited number of individual restaurants within the International Operated [removed: Markets segment,] [added: Markets,] where the Company also has an equity investment and records its share of net results in equity in earnings of unconsolidated affiliates.

In support of the Company’s values, the Company’s annual incentive plan holds the Chief Executive Officer ("CEO") and Executive Officers accountable for efforts [removed: that drive] [added: towards the following Company initiatives: (i) advancing the Company’s values, (ii) driving] employee engagement and [removed: our values.][added: (iii) executing its franchising strategy.]

You can find more information about the Company's human capital management and related initiatives in our [removed: 2023-2024] [added: 2024-2025] Purpose & Impact Report and on the “Our Purpose & Impact” section of the Company’s website.

Company employees, which include those in the Company's corporate and other offices as well as in Company-owned and operated restaurants, totaled over 150,000 worldwide as of year-end [removed: 2024,] [added: 2025,] of which approximately 70% were based outside of the U.S. In addition to Company employees, the over two million individuals who work in McDonald's franchised restaurants around the world are critical to the Company’s success, enabling it to drive long-term value creation and further its purpose and mission.

Inclusion is one of the Company’s core values, which it strives to integrate into business operations to deliver an inclusive experience for [removed: stakeholders—including employees, franchisees, suppliers, customers and the communities in which the Company operates.][added: stakeholders.]

McDonald's Corporation [removed: 2024] [added: 2025] Annual Report 4

The Company's Global [added: People] Brand Standards (which apply to all McDonald’s restaurants, whether Company-owned and operated or franchised) prioritize action in four key areas: protecting employee health and safety, preventing workplace violence, preventing harassment, discrimination and retaliation, and listening through restaurant employee feedback.

[removed: In 2021, the Company publicly communicated its ongoing commitment to equal pay, which is supported by an] [added: The Company’s] annual pay [removed: gap] [added: equity] analysis [removed: that] aims to ensure equitable pay practices are consistently implemented and executed across the Company.

The Company follows Global Pay Principles to [added: help] ensure that [removed: fair] [added: its] pay practices are understood and consistently implemented for all Company employees; these principles enforce its understanding that pay should be competitive, non-discriminatory, performance-based, understandable, and compliant with all applicable legal and regulatory requirements and standards.

The Company is committed to providing opportunities for people to enhance their skills and fulfill their potential through talent development [removed: programs, apprenticeship opportunities,] [added: programs] and language and technical skill training and support for continuing education, as it believes this helps to facilitate talent attraction, career development, and retention.

The Company is proud to support Ronald McDonald House [removed: Charities (“RMHC”)] and their global network of [removed: over 255] [added: nearly 250] local chapters in more than 60 countries and regions in their mission to provide essential services to remove barriers, strengthen families and promote healing when children need healthcare.

For more information related to the Company’s annual pay equity analysis please refer to the 2024-2025 Purpose & Impact Report.

As part of its digital food safety initiative, the Company has optimized internal digital platforms to monitor and measure adherence to our food safety standards and improve data quality.

The Company takes action on the issues that are most important to its business, and that will help create long-term sustainable value.

The Company believes that effectively managing its environmental and social impact through robust governance structures, strategies, goals and performance indicators is part of operating our business responsibly.

By doing so, it aims to maximize shareholder value, ensure trust in the brand and build long-term resiliency.

In 2025, global comparable sales increased 3.1%.

- Comparable sales in the International Operated Markets increased 3.2%, reflecting positive comparable sales in nearly all markets, led by Germany and Australia.

Positive comparable sales were led by Japan, with all geographic regions reflecting positive comparable sales.

The Company also expects a sequential increase in capital expenditures of about $300 million to $500 million for 2027, targeting 50,000 global units by the end of 2027.

| | | | | | | 2025 | | | | | | 2024 | | | | | | | | | 2025 | | | | | | | | | 2025 | | | | | |

| | | | | | | 2025 | | | | | | 2024 | | | | | | | | | 2025 | | | | | | 2025 | | | | | |

| | | | | | | 2025 | | | | | | *2024* | | | | | | 2025 | | | | | | *2024* | | |

Company-owned and operated margins reflected the impact of ongoing inflationary cost pressures in the U.S. and the International Operated Markets.

The U.S. was impacted by negative sales performance for the year, while the International Operated Markets reflected sales-driven growth.

- Gains on sales of restaurant businesses

Gains on sales of restaurant businesses increased primarily due to more sales of restaurants in the International Operated Markets and the U.S.

In 2024, impairment and other charges (gains), net reflected pre-tax charges of $221 million, primarily related to restructuring charges

Results in 2025 reflected the impact of foreign currency translation and higher average interest rates.

Results for 2024 reflected discrete income tax benefits related to restructuring initiatives.

Cash provided by operations totaled $10.6 billion in 2025, an increase of $1.1 billion driven by favorable working capital movement and improved operating results.

The decrease was primarily due to the Company's increased ownership stake in Grand Foods Holding in 2024.

*RESTAURANTS BY SEGMENT*

In 2025, approximately 6.7 million shares were repurchased for $2.0 billion under the program.

Total assets increased $4.3 billion or 8% in 2025, primarily due to the impact of foreign currency translation and an increase in Net property and equipment.

| McDonald's Corporation | | | $100 | | | $128 | | | $128 | | | $148 | | | $148 | | | $160 | | |

| S&P 500 Index | | | $100 | | | $129 | | | $105 | | | $133 | | | $166 | | | $196 | | |

| Dow Jones Industrials | | | $100 | | | $121 | | | $113 | | | $131 | | | $150 | | | $173 | | |

| October 1-31, 2025 | | | | | | 813,393 | | | | | | $ | 304.07 | | | | | 813,393 | | | | | | | | | $ | 13,296,795,811 | |

| November 1-30, 2025 | | | | | | 592,192 | | | | | | 304.27 | | | | | | 592,192 | | | | | | | | | 13,116,612,182 | | |

| December 1-31, 2025 | | | | | | 423,841 | | | | | | 313.70 | | | | | | 423,841 | | | | | | | | | 12,983,652,040 | | |

| Total | | | | | | 1,829,426 | | | | | | $ | 306.37 | | | | | 1,829,426 | | | | | | | | | | | |

Moreover, rapid technological developments, including artificial intelligence (AI)-driven tools, may increase our exposure to existing intellectual property risks, including theft or unlicensed use, intellectual property disputes and enforcement challenges.

Additionally, cybersecurity threats continue to become more sophisticated, including AI-enabled attacks and deepfake technology.

These risks include potential operational disruptions, data integrity issues, and unintended consequences from algorithmic decision-making.

Further, emerging global and U.S. regulations governing AI use – including requirements for responsible use, transparency, bias mitigation, accountability, and explainability – may impose significant compliance obligations and increase reputational risk.

Failure to comply with these standards or to effectively manage associated risks, including ethical considerations such as fairness, non-discrimination, and responsible deployment, could result in regulatory penalties, litigation, operational setbacks, or adverse brand perceptions.

Additionally, as we expand digital engagement, data collection and personalization through AI, we face new and heightened risks under laws and regulations, including U.S. state-level regulations and the EU AI Act.

Non-compliance or misuse of personal data could lead to significant fines, litigation, and reputational harm.

Increasing scrutiny of such initiatives, including via legislative, regulatory or administrative developments and enforcement priorities, may create compliance challenges, reputational risks, and potential litigation exposure.

These additional commitments may or may not overlap, and may in some cases conflict, with new disclosure required in these areas.

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The Company generally does not invest any restaurant capital under a developmental license or affiliate arrangement, and it receives a royalty based on a percent of sales, and generally receives initial fees upon the opening of a new restaurant or grant of a new license.

Results of the 2024 pay gap analysis demonstrated our commitment by showing that women globally in Company-owned and operated markets were paid 99.93 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 in 2025 intends to continue its commitment to close pay gaps identified in annual equal pay analyses.

In 2024, the Company delivered against its five-year, $100 million commitment to RMHC.

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

The Company believes taking action on environmental matters will drive long-term business value by ensuring that it is managing operational costs in its energy supply, improving the security of its raw material supply, stewarding the environment in its surrounding communities and reducing its exposure to increasing environmental risks, regulation and costs.

The audits help ensure that suppliers are meeting McDonald’s Supplier Quality Management System (SQMS) standards.

A digital transformation project is underway to promote data excellence and continuous measures on quality and food safety performance.

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.

Beginning in the first quarter of 2023, McDonald's excluded results from Argentina and Lebanon in the calculation of comparable sales due to hyperinflation (Venezuela continues to be excluded).

In 2024, global comparable sales decreased 0.1%.

- Comparable sales in the International Operated Markets segment decreased 0.2%, reflecting mixed results across the markets.

Negative comparable sales across some markets, led by France, was partly offset by positive comparable sales in most markets.

The continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America and Japan.

Additionally, 2023 results were impacted by charges related to the Company's *Accelerating the Arches* growth strategy, including restructuring charges associated with *Accelerating the Organization,* and charges related to the write-off of impaired software no longer in use.

2025 Outlook

Globally, the Company expects to open approximately 2,200 restaurants.

Long-Term Outlook

Over the long-term, the Company expects to achieve the following average annual financial targets:

- Net restaurant unit expansion of about 2.5% of Systemwide sales growth, in constant currencies;

- Continued operating margin expansion;

- Sequential increases in capital expenditures of about $300 million to $500 million each year through 2027;

- Between 4% and 5% net new restaurant unit growth, targeting 50,000 global units by 2027 with a run rate of about 1,000 gross restaurant openings across the U.S. and International Operated Markets segments in 2027; and

- Free cash flow conversion rate targeted to be in the 90% range, with the conversion percentage likely below this target during a period of heightened investments.

In the first quarter of 2024, the Company changed its rounding presentation to the nearest whole number in millions of reported amounts, except per share data or as otherwise designated.

The change in rounding presentation has been applied to all prior year amounts presented.

In certain circumstances, this change adjusted previously reported balances, however, these changes were not significant, and no other changes were made to previously reported financial information.

Impact of the War in the Middle East

The Company’s Systemwide sales and revenue have continued to be negatively impacted by the war in the Middle East, primarily in the International Developmental Licensed Markets & Corporate segment, where the majority of restaurants are under a developmental license or affiliate arrangement.

The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue until the war concludes and the macroeconomic conditions recover.

*•*Pre-tax charges of $72 million, or $0.08 per share, related to the write-off of impaired software no longer in use

In 2024, the Company provided an immaterial amount of assistance, including royalty relief and/or deferral of cash collection for certain franchisees.

*TOTAL REVENUES BY SEGMENT*

Franchised revenues include rent and royalties based on a percent of sales, and initial fees.

Both segments were also impacted by ongoing inflationary cost pressures.

*RESTAURANT MARGINS BY TYPE (In millions)*

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| | | | Item 1C | | | Cybersecurity | | | Page [removed: [35](#i6d278eb3cca24d478428bd1e8807ef56_2510)] [added: [34](#i6d278eb3cca24d478428bd1e8807ef56_2510)] | | |

| | | | Item 2 | | | Properties | | | Page [removed: [37](#i6d278eb3cca24d478428bd1e8807ef56_64)] [added: [36](#i6d278eb3cca24d478428bd1e8807ef56_64)] | | |

| | | | Item 3 | | | Legal Proceedings | | | Page [removed: [37](#i6d278eb3cca24d478428bd1e8807ef56_61)] [added: [36](#i6d278eb3cca24d478428bd1e8807ef56_61)] | | |

| | | | Item 5 | | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | Page [removed: [27](#i6d278eb3cca24d478428bd1e8807ef56_55)] [added: [26](#i6d278eb3cca24d478428bd1e8807ef56_55)] | | |

| | | | Item 7A | | | Quantitative and Qualitative Disclosures About Market Risk | | | Page [removed: [23](#i6d278eb3cca24d478428bd1e8807ef56_40)] [added: [22](#i6d278eb3cca24d478428bd1e8807ef56_40)] | | |

| | | | Item 8 | | | Financial Statements and Supplementary Data | | | Page [removed: [39](#i6d278eb3cca24d478428bd1e8807ef56_73)] [added: [38](#i6d278eb3cca24d478428bd1e8807ef56_73)] | | |

| | | | Item 9A | | | Controls and Procedures | | | Page [removed: [69](#i6d278eb3cca24d478428bd1e8807ef56_217)] [added: [68](#i6d278eb3cca24d478428bd1e8807ef56_217)] | | |

| | | | Item 10 | | | Directors, Executive Officers and Corporate Governance | | | Page [removed: [38](#i6d278eb3cca24d478428bd1e8807ef56_67),] [added: [37](#i6d278eb3cca24d478428bd1e8807ef56_67),] (a) | | |

| | | | Item 12 | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | Page [removed: [69](#i6d278eb3cca24d478428bd1e8807ef56_220),] [added: [68](#i6d278eb3cca24d478428bd1e8807ef56_220),] (a) | | |

(a) - 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: 2024.][added: 2025.]

McDonald's Corporation [removed: 2024] [added: 2025] Annual Report 72

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 [removed: 25th] [added: 24th] day of February, [removed: 2025:][added: 2026:]

| *By* | | | /s/ Lauren [added: B.] Elting | | | *By* | | | /s/ Paul S. Walsh | | |

| | | | Lauren [added: B.] Elting | | | | | | Paul S. Walsh | | |

McDonald's Corporation [removed: 2024] [added: 2025] Annual Report 73

| | | | February 24, 2026 | | |

| *By* | | | /s/ Ian F. Borden | | | *By* | | | /s/ Margaret H. Georgiadis | | |

| | | | Ian F. Borden | | | | | | Margaret H. Georgiadis | | |

| *By* | | | /s/ Anthony G. Capuano | | | *By* | | | /s/ Michael D. Hsu | | |

| | | | Anthony G. Capuano | | | | | | Michael D. Hsu | | |

| *By* | | | /s/ Kareem Daniel | | | *By* | | | /s/ Christopher J. Kempczinski | | |

| | | | Kareem Daniel | | | | | | Christopher J. Kempczinski | | |

| *By* | | | /s/ James D. Farley, Jr. | | | *By* | | | /s/ Miles D. White | | |

| | | | James D. Farley, Jr. | | | | | | Miles D. White | | |

| | | | February 25, 2025 | | |

| *By* | | | /s/ Ian F. Borden | | | *By* | | | /s/ Michael D. Hsu | | |

| | | | Ian F. Borden | | | | | | Michael D. Hsu | | |

| *By* | | | /s/ Anthony G. Capuano | | | *By* | | | /s/ Christopher J. Kempczinski | | |

| | | | Anthony G. Capuano | | | | | | Christopher J. Kempczinski | | |

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

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

| *By* | | | /s/ Margaret H. Georgiadis | | | *By* | | | /s/ Miles D. White | | |

| | | | Margaret H. Georgiadis | | | | | | Miles D. White | | |