McDonald's plans to inject $8.5 billion into franchisees for restaurant renovations and technology upgrades

McDonald's announced its latest plan on the 23rd, which is expected to inject US$8.5 billion (approximately NT$270.4 billion) into franchisees for restaurant renovations and technology upgrades to cope with the consumer economy that will continue to be impacted by inflation in the foreseeable future.

Agence France-Presse reported that the company's executives emphasized that this franchisee support program, which will last until 2036, is the best way to revive the growth of the domestic market in the United States. McDonald's sales growth in the United States has shown signs of slowing as U.S. consumers are facing high prices for gasoline and necessities.

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When explaining specific measures such as rent relief and capital support, McDonald's Chief Financial Officer Ian Borden pointed out: "When franchisees have a stronger economic foundation, our overall system will be stronger."

In addition to promoting new products such as chicken, coffee and other menu items, company executives also emphasized in a series of briefings that they plan to introduce artificial intelligence (AI) technology to speed up ordering and further improve inventory and supply chain management. McDonald's said the initiative, called "Next," is expected to bring about a 2.5% efficiency improvement at the restaurant level.

However, throughout the presentation, McDonald's shares came under heavy selling pressure. Bourdain admitted during the meeting that sales in the U.S. market this quarter are expected to show "slightly negative growth."

In an interview with US financial media CNBC, McDonald's CEO Chris Kempczinski described inflation as "very sticky not just in the United States but around the world." He told analysts that in this general economic environment, the company's goal is to expand market share by returning to fundamentals, which is "the foundation of continuing to improve the taste and quality of our meals." In addition, McDonald's is also trying to strengthen its "value" positioning to consumers with tight budgets through meal combinations and digital promotions.

This is the first time McDonald's has held an investor day in three years. Previously released data by the company showed that comparable sales in the U.S. market will only grow slightly by 0.2% in 2024 and 2.1% in 2025. When asked if he was confident that McDonald's' annual growth rate in the local market could return to the historical average of about 3% to 4%, Kempczinski gave an affirmative answer: "Yes, absolutely."

This investment in franchisees is aimed at easing the financial impact faced by small businesses; in the United States, just renovating the lobby of a restaurant can cost up to US$450,000 (approximately NT$14.31 million). Bourdain said the "Next" plan also plans additional investment, which will bring the total upgrade cost of a single U.S. restaurant to about $800,000, and will be "phased in over time."

Most of McDonald's U.S. stores are operated by franchises. Data shows that in 2025, more than 60% of McDonald's global revenue will come from franchise stores.

McDonald's shares fell 6.4% after midday on the 23rd.