McDonald's Beats on EPS but U.S. Traffic Declines Again

By Marcus Bennett

McDonald's posted adjusted earnings of $3.57 per share for the third quarter, beating Wall Street's $3.38 expectation by 19 cents, even as traffic to its U.S. restaurants fell and domestic same-store sales (revenue at locations open at least 13 months) slipped 0.2%. The stock closed more than 6% higher Wednesday, a verdict that rewarded the profit beat and international strength while tolerating the soft home market. For finance leaders, the quarter is a case study in how margin delivery and value-driven demand repair can run on separate clocks.

What did the numbers show?

The top line disappointed. Revenue rose 1% to $7.16 billion, below the $7.29 billion analysts surveyed by LSEG had expected. Net income told a stronger story: $2.49 billion, or $3.51 per share, up from $2.28 billion, or $3.18 per share, a year earlier. Excluding restructuring charges and other items, the company earned $3.57 per share.

Globally, same-store sales rose 1.5%, ahead of the 1.3% increase analysts expected according to StreetAccount. The U.S. segment's 0.2% decline also beat the forecast 0.5% drop — a miss, but a smaller one than the market priced in.

Which divisions carried the quarter?

The international split explains most of the outperformance. The two overseas units moved in opposite directions relative to expectations:

• International developmental licensed markets (including Japan and China): same-store sales grew 4.2%, double the 2.1% increase Wall Street forecast.
• International operated division (including top markets such as Australia and Germany): growth of 1.4%, short of the projected 2.1%.

"In the majority of our large international markets, we're holding or gaining share," CFO Ian Borden said on the company's conference call. "It's a soft consumer environment, but we're doing well."

France stood out as the weak spot. Beyond a softer economy, McDonald's flagged short-term disruptions tied to student protests. CEO Chris Kempczinski said French franchisees recently voted on a strategy to turn the business around — a governance signal worth noting, since franchisee buy-in typically precedes any credible local revival plan.

What fixed the U.S. trajectory — and what didn't?

The domestic recovery was a within-quarter story, not a quarter-long one. Same-store sales fell in July and August, then returned to growth in September, Borden said on the call. The driver was an explicit value intervention: marketing concentrated on Extra Value Meals and the restart of regional and national promotions on the mobile app, channels that matter most to the chain's most frequent diners.

"In the U.S., we're encouraged by improvement as the quarter progressed following our intervention on value," Kempczinski said in a statement.

The candor has limits. When an analyst pressed him, Borden clarified that he had not said U.S. same-store sales would be better in the fourth quarter. That distinction matters for anyone modeling the next print: September's inflection is a data point, not a trend, and management declined to underwrite it forward.

The context is equally blunt. Kempczinski said in August that the U.S. business was falling short on execution, particularly in implementing its value offerings. Like many restaurant chains, McDonald's has leaned into discounts over the past two years to attract budget-conscious diners — a tactic that buys traffic at the cost of check size and margin discipline.

What is being tested for 2027?

The structural answer is still in the lab. Executives said on the call that McDonald's is testing two new value menus: one built on mix-and-match bundles, the other on set combinations of menu items. Whichever resonates more with customers and franchisees will roll out across the U.S. in early 2027.

That timeline is the real headline for planning purposes. The company that once iterated value platforms nationally now runs a two-arm market test before committing — an 18-month runway from experimentation to full deployment. Practitioners should read that as management acknowledging the last value rollout failed on execution, not on concept.

What does this mean going forward?

The quarter nets out to a margin story outrunning a demand story. Earnings grew roughly 9% year over year on 1% revenue growth, and a 6% share-price move rewarded exactly that arithmetic. But the forward implication sits with two unresolved items: whether September's U.S. recovery holds without a confirmed fourth-quarter guide, and whether France — roughly a drag the company declined to quantify — stabilizes before the 2027 value platform arrives. Until both clarify, the beat looks engineered from cost discipline and international share gains rather than a durable domestic turnaround.