McDonald's Plummets, but Franchise Model Remains a Strong Bet

McDonald's (MCD.US) has been overshadowed by the AI trade, but its discounted stock price presents an attractive opportunity for investors. As of August 25, 2026, McDonald's closed at $268.10, down about 12.3% year-to-date and 21.5% from its March high ($341.75). Its current trailing P/E ratio is around 21.9x and forward P/E is about 20.5x, approximately 17% and 15% below their five-year averages, respectively.

The company's business model is built on a franchise and real estate network, with franchised locations accounting for roughly 95% of McDonald's 45,000+ global stores. This model provides several advantages, including smaller store-level cost volatility borne by corporate, a cushion against inflation, and exceptionally high profit margins and free cash flow conversion.

McDonald's expects to open approximately 2,600 new restaurants in 2026, translating to a net addition of about 2,100 stores after closures. The company projects that net new stores will contribute roughly 2.5 percentage points to systemwide sales growth in 2026.