McDonald's Shares Plummet on $8.5 Billion Franchisee Support Plan

McDonald's shares plummeted 5% after unveiling an $8.5 billion franchisee support plan, warning that industry traffic could remain flat despite inflation.

The fast-food giant plans to provide approximately $8.5 billion in support through 2036, including around $5 billion by 2030, through a combination of rent relief and capital support to accelerate restaurant modernization and technology upgrades.

Investors are concerned about the timing of the investment, as the benefits from these efforts are expected to develop over several years. McDonald's is targeting approximately 250 basis points of gross restaurant-level efficiency gains under its NEXT strategy, which aims to simplify operations, modernize locations, strengthen employee training, and expand the use of AI-powered operating systems.

The company expects industry traffic in its wholly owned markets to remain flat while inflation stays elevated. McDonald's is targeting market-share gains in chicken and beverages by 2030, maintaining leadership in beef, as it responds to changing consumer preferences.