McDonald's stock forecast: weak US sales increase pressure on the share price

The steepest decline in US sales since 2020 highlights short-term operational risks for McDonald's. Against this backdrop, the MCD share price may correct towards 275 USD.

In Q1 2025, McDonald's Corporation (NYSE: MCD) reported a 3.6% drop in comparable sales in the US, the sharpest fall since 2020. Global comparable sales also fell by 1%, falling short of analysts’ expectations and pointing to challenges in key markets, including the UK, Australia, Canada, Germany, and Japan. The company has come under pressure amid economic uncertainty and reduced consumer spending, particularly among low- and middle-income groups. Investor sentiment has turned negative. Although analysts remain broadly optimistic about the company’s long-term value creation strategy, McDonald's shares fell by 2% following the earnings release and have continued to decline, reflecting market concerns over the revenue shortfall and persistent macroeconomic pressures.

This article examines McDonald's Corporation, providing a fundamental analysis of McDonald's (MCD) earnings report and a technical analysis of McDonald's Corporation shares, which underpins the price forecast for MCD in 2025. It also describes the company's business model, assesses the risks associated with investing in McDonald's Corporation stock, and presents expert predictions for McDonald's Corporation shares.

About McDonald's Corporation

McDonald's Corporation is the world's largest fast-food restaurant chain, founded in 1940 by brothers Richard and Maurice McDonald (McDonald Brothers) in San Bernardino, California. In 1955, Ray Kroc (Raymond Kroc) joined the company and transformed it into an international franchise. The company went public on 21 April 1965, listing on the New York Stock Exchange (NYSE: MCD).

McDonald's specialises in selling burgers, fries, beverages, and other fast-food products. The company is expanding its digital services and loyalty programs while adapting its menu to local markets.

McDonald's also owns one of the world's largest real estate portfolios. A significant portion of its profits comes from leasing properties to its franchisees, making it a restaurant business and a major player in commercial real estate.

McDonald's Corporation key financial flows

McDonald's business model is unique, combining elements of the traditional restaurant industry with franchising and real estate management. The company's main revenue streams fall into four key categories:

• Franchising: many McDonald's restaurants operate under the franchise model, where the company grants its partners the right to use its brand, recipes, quality standards, and other corporate guidelines. Revenue in this segment comes from an initial franchisee fee paid by partners to open a McDonald's restaurant, as well as an ongoing percentage of sales
• Company-operated restaurants: revenue in this business comes directly from products and service sales, with the company covering all operational expenses for these locations
• Real estate income: McDonald's owns numerous properties for operating restaurants. As the landowner or leaseholder, it earns income from leasing or subleasing the land to its franchisees. In some cases, McDonald's only owns the land, while partners build and own the buildings. This strategy enables the company to generate stable and long-term income independent of the success of specific restaurants
• Supply chain and logistics: McDonald's often controls its franchisees' entire supply and procurement chain, generating additional income through markups on products and ingredients

This diversified business model allows the company to sustain long-term growth and reduce reliance on a single revenue stream. In its quarterly earnings reports, McDonald's provides separate financial data for franchised and company-operated restaurants, while income from other segments is recorded under Other Revenues.

McDonald's Corporation Q3 2024 earnings report

On 29 October, McDonald's released its financial results for Q3 2024. Below is a comparison with the same period in 2023:

• Revenue: 6.87 billion USD (+3%)
• Net income: 2.25 billion USD (-3%)
• Earnings per share: 3.13 USD (-1%)
• Operating income: 3.18 billion USD (-1%)
• Revenues from franchised restaurants: 4.09 billion USD (+1%)
• Franchised restaurant occupancy expenses: 646 million USD (+3%)
• Revenues from company-owned restaurants: 2.65 billion USD (+4%)
• Company-owned restaurant expenses: 2.24 billion USD (+5%)
• Other revenues: 124 million USD (+39%)

In its commentary on the report, McDonald's management highlighted cautious consumer behaviour and inflationary pressures, which affected sales, resulting in a flat performance overall. In the US, a modest increase was recorded, with comparable sales rising by 0.3%, driven by successful promotions and menu enhancements. However, international markets saw a decline, reflecting shifts in consumer preferences.

For its Q4 2024 outlook, management did not provide specific numerical forecasts but expressed a cautious stance regarding the future economic environment. They noted that they anticipated ongoing challenges related to consumer spending and potential adverse effects from currency fluctuations, particularly in emerging markets. Despite these challenges, McDonald's leadership remained optimistic about its long-term strategic initiatives. In particular, the focus was on rebuilding consumer trust following a recent E. coli incident in the US, which had affected the brand's reputation, and strengthening marketing efforts to attract customers.

McDonald's Corporation Q4 2024 earnings report

On 10 February, McDonald's released its Q4 2024 report, indicating that revenue remained unchanged compared to the same period in 2023. Below are the key financial metrics:

• Revenue: 6.39 billion USD (unchanged)
• Net income: 2.02 billion USD (-1%)
• Earnings per share: 2.8 USD (unchanged)
• Operating income: 2.86 billion USD (+2%)
• Revenues from franchised restaurants: 3.96 billion USD (+2%)
• Franchised restaurant occupancy expenses: 635 million USD (unchanged)
• Revenues from company-owned restaurants: 2.31 billion USD (-7%)
• Company-owned restaurant expenses: 1.98 billion USD (-5%)
• Other revenue: 120 million USD (+88%)

According to CEO Chris Kempczinski, McDonald's faced external challenges in Q4 2024, including a decline in consumer spending and an incident involving bacterial contamination in its products, which negatively affected overall performance. He noted that while the results were generally strong, they fell short of expectations in some international markets and customer traffic trends.

The company remained optimistic about profitability growth in 2025. Management forecast that the operating margin would rise to a mid-to-high range, exceeding the 46.3% adjusted margin achieved in 2024. In 2025, McDonald's planned to focus on affordable menu options to attract budget-conscious consumers as well as on its global digital transformation, which has already become a key driver of revenue growth.

Despite flat revenue and net income in Q4 2024, investors responded positively to McDonald's optimistic 2025 outlook, leading to a 4.7% increase in its share price following the report's release.

McDonald's Corporation Q1 2025 earnings report

On 1 May, McDonald's released its earnings report for Q1 2025, which ended on 31 March. Below are its key financial indicators:

• Revenue: 5.96 billion USD (-3%)
• Net income: 1.87 billion USD (-3%)
• Earnings per share: 2.60 USD (-2%)
• Operating income: 2.64 billion USD (-3%)
• Revenues from franchised restaurants: 3.66 billion USD (-2%)
• Franchised restaurant occupancy expenses: 620 million USD (-1%)
• Revenues from company-owned restaurants: 2.31 billion USD (-7%)
• Company-owned restaurant expenses: 2.13 billion USD (-9%)
• Other revenues: 162 million USD (+78%)

In Q1 2025, McDonald's faced some serious challenges, leading to a 3.6% drop in comparable sales in the US, the steepest fall since 2020. This decline was driven by a fall in restaurant traffic as low- and middle-income consumers began to tighten their budgets amid inflation and economic uncertainty. CEO Chris Kempczinski noted that while high-income customers remain loyal, most consumers have become more cautious.

Global markets also experienced a decline, with global comparable sales down by 1%, missing analysts’ expectations of 0.95% growth. The downturn was attributed to lower consumer spending caused by inflation, tariff uncertainty, and broader economic challenges, particularly evident in the US and Europe. However, some franchising markets, such as the Middle East and Japan, saw demand rebound following earlier boycotts.

From an operational perspective, McDonald's faced pressure due to rising costs. Wage increases, especially in California, and higher raw material prices negatively impacted profitability. Additionally, challenges arose in maintaining the brand’s affordable image: price increases disrupted the usual value programs, prompting customers to reconsider their preferences.

Moreover, the partnership with Krispy Kreme proved disappointing. A nationwide launch of a major doughnut offering in McDonald's restaurants was suspended due to weaker-than-expected demand. Both companies are reassessing their partnership strategy.

Despite these challenges, McDonald's remains committed to long-term growth. The company plans to open around 2,200 new restaurants worldwide in 2025, including approximately 1,000 in China, which is expected to increase the total number of outlets by 4%. Capital investment is forecasted to range from 3.0 to 3.2 billion USD, primarily aimed at supporting new openings and technological developments.

McDonald's current situation points to short-term economic difficulties, while its strategic initiatives and expansion plans confirm the company’s commitment to sustainable growth in the long term.

Expert forecasts for McDonald's Corporation shares in 2025

• Barchart: 19 out of 35 analysts rated McDonald's stock as a Strong Buy, two as a Moderate Buy, and 14 as a Hold. The target price for potential share price growth is 370 USD
• MarketBeat: 17 out of 28 experts gave the stock a Buy rating, while 11 recommended Hold. The target price for potential share price growth is 364 USD
• TipRanks: 15 out of 24 professionals advised Buy, while nine recommended Hold. The target price for potential share price growth is 364 USD
• Stock Analysis: eight out of 26 analysts rated the stock as a Strong Buy, nine as a Buy, and nine as a Hold. The target price for potential share price growth is 364 USD

No analysts currently recommend selling McDonald's shares.

McDonald's Corporation stock price forecast for 2025

On the weekly timeframe, McDonald's shares are trading within an upward channel. However, a divergence has formed on the MACD indicator, signalling a potential corrective decline in MCD prices. Historical data show that following a divergence on the MACD, the scale of the correction has not exceeded 20%. Based on the current stock performance of McDonald's Corporation, the price movement scenarios for 2025 are as follows:

The main forecast for McDonald's Corporation shares suggests a decline in the price towards the trendline around 275 USD, corresponding to a correction of approximately 17% from the historical maximum. Once the correction is complete, a resumption of growth is expected, with a potential target at the upper boundary of the channel, around 360 USD.

The alternative stock forecast for McDonald's Corporation anticipates a breakout of the resistance level at 325 USD, which may indicate a continuation of the upward movement without a prior correction. In this case, MCD prices could reach the upper boundary of the channel in the region of 350 USD. At the same time, divergence on the indicator would persist. A rebound from the upper boundary of the channel would serve as a signal for the start of a corrective decline, with a potential target around the trendline at 280 USD.

Risks of investing in McDonald's Corporation stock

When investing in McDonald's Corporation stock, it is essential to consider the risks the company may face in 2025. Below are the key risks:

• Food safety issues: the discovery of E. coli in McDonald's products in October 2024 resulted in a 0.3% decrease in revenue in Q4, affecting consumer trust. Although the FDA confirmed no current food safety issues with McDonald's products, this incident highlighted the risks associated with foodborne illnesses, affecting both sales and the brand's reputation
• Increased competition and shifting consumer preferences: with a growing number of competitors and a consumer shift towards healthier food options, McDonald's plans to expand its chicken menu, including the return of popular items like the Snack Wrap, to meet evolving consumer expectations
• Operational challenges: the introduction of the Snack Wrap to the menu aims to boost sales in the US but could lead to operational issues due to longer preparation times, potentially affecting service speed and overall customer satisfaction
• Economic factors: inflation continues to strain consumer spending. CEO Chris Kempczinski forecasts a challenging 2025 and notes that low-income customers will likely continue facing financial difficulties, which could reduce their dining-out expenditures