McDonald's unveiled an $8.5 billion plan to upgrade restaurants and technology through 2036, but shares fell 6% in afternoon trading as investors weighed the cost. CEO Chris Kempczinski told CNBC that high inflation and flat restaurant traffic are the new normal for the industry, not a temporary phase.
The stock fell 6% in afternoon trading after the company laid out its McDonald's > NEXT growth strategy at an investor day in Chicago. The plan centers on restaurant remodels, an AI operating system called ArchIQ, and a bigger push into chicken and beverages.
Franchisees get billions, but face new costs
McDonald's plans to spend as much as $8.5 billion through 2036 to accelerate franchisees' restaurant investments, with about $5 billion of that arriving by 2030. A standard lobby remodel already costs franchisees $400,000 to $450,000, and the new tech and kitchen upgrades add roughly $800,000 more per restaurant, though McDonald's will offset part of that cost.
The company projects franchisee returns in the mid-to-high 20% range, with efficiency gains adding about $100,000 in annual cash flow per average U.S. restaurant and paying back the investment in about four years. By 2030, McDonald's is targeting operating margins in the low-to-mid 50% range, up from 46.1% in 2025.
Inflation is the new baseline, CEO says
Kempczinski said the company no longer treats today's inflation and traffic patterns as unusual. According to CNBC: "Because I think, as we look out forward, we're not expecting things to change." He added that beef costs have nearly doubled over the last five years in the company's biggest markets.
The chain reported U.S. same-store sales growth of just 0.8% in its most recent quarter as domestic traffic declined. Facing that backdrop, Kempczinski said McDonald's strategy is to take market share from rivals rather than wait for new customers to return.
More chicken, coffee and AI at the counter
McDonald's wants to grow its global market share in chicken and beverages by about 1.5 percentage points each by 2030, including hand-breaded chicken options to compete with Chick-fil-A, Popeyes and Raising Cane's. New espresso machines and expanded drink menus are also part of the push into the beverage category.
The ArchIQ system, including a voice ordering tool called Archy, is designed to save about 50 labor hours per week per restaurant while also managing inventory and staff schedules. McDonald's has also started testing a digital drive-thru ad network at 450 company-owned restaurants over the past month. Executives said the ad network could grow into a billion-dollar business.
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