MCD 10-K & 10-Q changes, risk factors and insider trading

To continue to be successful in the future, we believe we must preserve, enhance and leverage the value and relevance of our brand, including our corporate purpose, mission and values. Brand value is based in part on consumer perceptions, which are affected by a variety of factors, including the nutritional content and preparation of our food, the ingredients we use, the manner in which we source commodities and general business practices across the System, including the people practices at McDonald’s restaurants. Consumer acceptance of our offerings is subject to change for a variety of reasons, and some changes can occur rapidly. For example, nutritional, health, environmental and other scientific studies and conclusions, which continuously evolve and may have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that affect the “informal eating out” (“IEO”) segment or perceptions of our brand, generally or relative to available alternatives. Our business could also be impacted by business incidents or practices, whether actual or perceived, particularly if they receive considerable publicity or result in litigation or governmental investigations or proceedings, as well as by our perceived position or lack of position on environmental, social responsibility, public policy, geopolitical and similar matters. In addition, we cannot ensure that franchisees or business partners will not take actions that adversely affect the value and relevance of our brand. Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the quick-service category of the "informal eating out" ("IEO") segment or our brand, culture, operations, suppliers or franchisees. If we are unsuccessful in addressing adverse commentary or perceptions, whether or not accurate, our brand and financial results may suffer.

Our continued success depends on our System’s ability to build upon our historic strengths and competitive advantages. In order toTo do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and industry trends in food sourcing, food and beverage preparation, foodmenu offerings, and consumer behavior and preferences, including with respect to the use of digital channelschannels, health and wellness trends and environmental and social responsibility matters. If we are not able to predict, or quickly and effectively respond to, these changes, or if our competitors are able to do so more effectively, our financial results could be adversely impacted.

In addition, weWe cannot ensure that franchisees and other third parties who hold licenses to our intellectual property will not take actions that adversely affect the value of our intellectual property. Moreover, rapid technological developments, including artificial intelligence (AI)-driven tools, may increase our exposure to existing intellectual property risks, including theft or unlicensed use, intellectual property disputes and enforcement challenges.

Disruptions in operations or price volatility in a market can also result from governmental actions (whether proposed or realized, unilateral or bilateral), such as price, foreign exchange or trade-related tariffs or controls, trade policies and regulations, sanctions and counter sanctions, government-mandated closure of our, our franchisees’ or our suppliers’ operations, and asset seizures. SuchSome or all of the above-referenced disruptions or volatility can also result from acts of war, terrorism or other hostilities. TheSuch governmental actions may have a broader impact of acts of war and related sanctions, including on macroeconomic conditions, geopolitical tensions, anti-American sentiment, consumer demand and the ability of us and our franchisees to operate in certain geographic areas, which in turn may also have an adverse impact on our business and financial results.

We depend on the effectiveness of our supply chain management to assure a reliable and sufficient supply of quality products, equipment and other materials on favorable terms. Although many of these items are sourced from a wide variety of suppliers in countries around the world, certain items have limited suppliers, which increases our reliance on those suppliers. Supply chain interruptions and related price increases have in the past and may in the future adversely affect us as well as our suppliers and franchisees, whose performance may have a significant impact on our results. Such interruptions and price increases could be caused by shortages, inflationary pressures, tariffs, unexpected increases in demand, transportation-related issues, labor-related issues, technology-related issues, weather-related events, natural disasters, geo-political tensions, acts of war, terrorism or other hostilities, or other factors beyond our control or that of our suppliers or franchisees. Interruptions in our System’s supply chain or ineffective contingency planning can increase our costs, impact ingredient quality, delay new restaurant openings, and/or limit the quality or availability of products, equipment and other materials that are critical to our System’s operations or to restaurant development.

Food safety concerns have had and may in the future have an adverse effect on our business. Our ability to increase sales and profits depends on our System’s ability to meet expectations for safe food and on our ability to manage the potential impact on McDonald’s of food-borne illnesses and food or product safety issues that may arise in the future, including in the supply chain, restaurants or delivery. Food safety is a top priority, and we dedicate substantial resources aimed at ensuring that our customers enjoy safe food products, including as our menu and service model evolve. However, food safety events, including instances of food-borne illness, have occurred within the food industry and our System from time to time (including the E. coli event in the U.S. in October 2024) and could occur in the future. Instances of food tampering, food contamination or food-borne illness, whether actual or perceived, could adversely affect our brand, reputation and financial results.

Information technology system failures or interruptions, or breaches of network security, or misuse of technology tools may impact our operations or cause reputational harm.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties to conduct our business,parties, whether developed and maintained by us or provided by third parties. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions. In addition, the artificial intelligence tools we are incorporating into certain aspects of our business may not generate the intended efficiencies and may impact our business results.

Security incidents and breaches have occurred from time to time occurred and may occur in the future occur involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers. TheseAdditionally, cybersecurity threats continue to become more sophisticated, including AI-enabled attacks and deepfake technology. Incidents may include such things as unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, deepfakes and other malicious uses of artificial intelligence, introduction of malware or ransomware, other disruptive problems caused by hackers or unintentional events. Certain of these technology systems contain personal, confidential, financial and other information of our customers, employees, franchisees and their employees, suppliers and other third parties, as well as financial, proprietary and other confidential information related to our business. Despite response procedures and measures in place in the event an incident occurs, itan event could result in disruptions, shutdowns, or a security breach including the theft or unauthorized disclosure of certain of the above-described information. The actual or alleged occurrence of any of these types of incidents could result in mitigation costs, reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including administrative fines, criminal or civil penalties or civil liabilities.

Our regulatory and legal environment worldwide exposes us to complex compliance, litigation and similar risks that could affect our operations and results in material ways. Many of our markets are subject to increasing, conflicting and highly prescriptive regulationslegislative, regulatory or administrative developments and enforcement priorities involving, among other matters, restaurant operations, product packaging,packaging and extended producer responsibility, marketing, use of information technology systems, the nutritional and allergen content and safety of our food and other products, labeling and other disclosure practices. Compliance efforts with those regulations may be affected by ordinary variations in food preparation among our own restaurants and the need to rely on the accuracy and completeness of information from third-party suppliers. We also are subject to increasing public focus, including by governmental and non-governmental organizations, on environmental, social responsibility and corporate governance matters. Our success depends in part on our ability to manage the impact of regulations and other initiatives that can affect our business plans and operations, which have increased and may continue to increase our costs of doing business and exposure to litigation, governmental investigations or other proceedings.

We are subject to legal and compliance risks and associated liability related to privacy and data protection requirements, including those associated with our technology-related services and platforms made available to business partners, customers, employees, franchisees or other third parties. An increasing number of our markets have enacted new privacy and data protection requirements (including the European Union’s General Data Protection Regulation and various U.S. state-level laws), and further requirements are likely to be proposed or enacted in the future. Failure to comply with these privacy and data protection laws could result in legal proceedings and substantial administrative fines, criminal or civil penalties or civil liabilities and materially adversely impact our financial results or brand perceptions. Additionally, as we expand digital engagement, data collection and personalization through AI, we face new and heightened risks under laws and regulations, including U.S. state-level regulations and the EU AI Act. Non-compliance or misuse of personal data could lead to significant fines, litigation, and reputational harm.

In recent years, there has been an increasing focus by stakeholders – including employees, franchisees, customers, suppliers, governmental and non-governmental organizations and investors – on environmental and social impact matters. A failure, whether real or perceived, to address environmental and social impact matters or to achieve progress on our environmental and social impact initiatives onas the anticipated timing or at all,intended, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, consumerbrand perceptions of our brand,perception, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity. Conversely,Stakeholder expectations may vary significantly, so our taking a position, whether real or perceived, on environmental and social impact, public policy, geopolitical and similar matters could also adversely impact our business. Increasing scrutiny of such initiatives, including via legislative, regulatory or administrative developments and enforcement priorities, may create compliance challenges, reputational risks, and potential litigation exposure.

The standards we set for ourselves regarding environmental and social impact matters, and our ability to meet such standards, may also impact our business. For example, we are working to manage risks and costs to our System related to climate change, greenhouse gases, and diminishing energy and water resources, and we have announced initiatives relating to, among other things, climate action, sustainability, and responsible sourcing. In addition, we are engaging in social impact initiatives, including community engagementengagement, philanthropy, and philanthropy; as well as our commitment to inclusion. We have faced increased scrutiny related to reporting on and achieving these initiatives, as well as continued public focus on similar matters, such as packaging and waste, animal health and welfare, deforestation and land use. We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks. These additional commitments may or may not overlap, and may in some cases conflict, with new disclosure required in these areas. Moreover, addressing environmental and social impact matters requires Systemwide as well as third party coordination and alignment, over which we do not have complete control and which may be unpredictable. The standards by which certain environmental and social impact matters are measured are also evolving and subject to assumptions that could change over time.

Severe weather conditions, natural disasters, acts of war, terrorism or other hostilities, social and geopolitical unrestunrest, orincluding anti-American sentiment, and climate change (or expectations or uncertainty about them) can adversely affect consumer behaviorconfidence levels and confidence levels,behavior, supply availability and costs and local operations, including temporary restaurant closures and delayed new restaurant openings, in impacted markets, all of which can affect our results and prospects. Climate change may also increase the frequency and severity of weather-related events and natural disasters. Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully.

•Cybersecurity Services, which is responsible for deploying and operating the frontline security controls that are designed to protect and defend McDonald’s against cyber-attacks. Cybersecurity teams are focused on specific areas of a layered defense, including Network Security, Endpoint Protection, Identity and Access Management, Data Protection,Security, and others, to ensure that these controls are integrated into critical systems and processes throughout the McDonald’s environment and operating effectively.

To drive Systemwide sales, operating income and free cash flow growth, our business strategies – including the components of our Accelerating the Arches and McDonald's > NEXT growth strategystrategies – must be effective in maintaining and strengthening customer appeal and capturing additional market share. Whether these strategies are successful depends mainly on our System’s continued ability to:

The Company franchises and owns and operates McDonald’sMcDonald's restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries. Of the 45,69946,028 McDonald's restaurants at MarchJune 31,30, 2026, approximately 95% were franchised.

The Company’sCompany's revenues consist of sales by Company-owned and operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. The Company’sCompany's Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology and digital platformsplatforms, and revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’sMcDonald's brand.

1.Serve - We put our customersguests and people first;

OurThe NEXT Strategy is aligned with the Company’s capital allocation philosophy of: (i) investinvesting in opportunities to grow the business and drive strong returns, including both capital expenditures as well asand investments in technology, digital,technology and ourother GBS organization,capabilities, (ii) prioritizeprioritizing ourits dividenddividend, and (iii) repurchaserepurchasing shares with remaining free cash flow over time.

FirstSecond Quarter and Six Months 2026 Financial Performance

Global comparable sales increased 3.8%.1.3% for the quarter and 2.5% for the six months.

•U.S. comparable sales increased 3.9%.0.8% for the quarter and 2.3% for the six months. Comparable sales results for both periods were primarily driven by positive check growth.growth, including favorable product mix, partly offset by negative comparable guest counts.

•International Operated Markets comparable sales increased 3.9%.1.5% Nearlyfor allthe quarter and 2.6% for the six months. Most markets reflected positive comparable sales,sales for both periods, led by Germany, Australia and the U.K., Germanypartly andoffset Australia.by France.

•International Developmental Licensed Markets comparable sales increased 3.4%.1.9% for the quarter and 2.6% for the six months. Positive comparable sales for both periods were led by Japan, with all geographic regions reflecting positive comparable sales. Comparable sales results for both periods were partly offset by negative comparable sales growth.in China.

In addition to the comparable sales results, the Company had the following financial results for the quarter and six months:

•Consolidated revenues increased 9%4% (4%2% in constant currencies). for the quarter and 6% (3% in constant currencies) for the six months.

•Systemwide sales increased 11%5% (6%4% in constant currencies). for the quarter and 8% (5% in constant currencies) for the six months.

•Consolidated operating income increased 12%3% (6%2% in constant currencies). Results reflected pre-tax charges of $47 million and $66 million for the current yearquarter and prior7% year,(4% respectively,in primarilyconstant relatedcurrencies) to restructuring charges associated with Acceleratingfor the Organization.six months. Excluding these current and prior year charges,charges detailed in the Operating Income and Operating Margin section on page 29 of this report, consolidated operating income increased 11%4% (5%2% in constant currencies). for the quarter and 7% (3% in constant currencies) for the six months.

•Diluted earnings per share was $2.78,$3.32 for the quarter, an increase of 7%6% (2%5% in constant currencies) and $6.10 for the six months, an increase of 6% (3% in constant currencies). Excluding thecurrent currentand prior year charges describeddetailed abovein the Net Income and Diluted Earnings Per Share section on page 23 of $0.05this per share,report, diluted earnings per share for the quarter was $2.83,$3.38, an increase of 6% (1%5% in constant currencies) whenand also$6.21, excludingan priorincrease yearof charges.6% (3% in constant currencies) for the six months.

•Comparable sales and comparable guest counts are compared to the same period in the prior year and represent sales and transactions, respectively, at all restaurants, whether owned and operated by the Company or by franchisees, in operation at least thirteen monthsmonths, including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, natural disasters, pandemics and acts of war, terrorism or other hostilities. Comparable sales exclude the impact of currency translation and the sales of any market considered hyperinflationary (generally identified as those markets whose cumulative inflation rate over a three-year period exceeds 100%), which management believes more accurately reflects the underlying business trends. Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.

The impact of foreign currency translation on consolidated operating results for the quarter and six months ended June 30, 2026 primarily reflected the strengthening of most major currencies against the U.S. Dollar, primarily driven by the Euro.Euro and the Australian Dollar.

NetFor the quarter, net income increased 6%5% (1%4% in constant currencies) to $1,983$2,362 million, and diluted earnings per share increased 7%6% (2%5% in constant currencies) to $2.78.$3.32. Foreign currency translation had a positive impact of $0.13$0.03 on diluted earnings per share.

Results included•Net pre-tax charges of $47$52 million, or $0.05$0.06 per share, for the three months ended March 31, 2026quarter and $66$99 million, or $0.07$0.11 per share, for the threesix months ended March 31, 2025,months, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working (Accelerating the Organization). Results for 2025 included the following:

During the quarter, the Company paid a quarterly dividend of $1.86 per share, or $1.3 billion, resulting in total dividends paid for the six months of $2.6 billion. Additionally, during the quarter, the Company repurchased 1.33.0 million shares of stock for $393$858 million.million, resulting in total purchases for the six months of 4.2 million shares, or $1.3 billion.

Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at MarchJune 31,30, 2026. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.

•Total Franchised revenues and Company-owned and operated sales increased 9%4% (4%2% in constant currencies), benefitingfor the quarter and increased 6% (3% in constant currencies) for the six months. Both periods benefited from strongpositive franchised sales performance across all segmentssegments. and the positive impact of foreign currency translation in theThe International Operated Markets and the International Developmental Licensed Markets.Markets also benefited from the positive impact of foreign currency translation and positive Company-owned and operated sales performance for both periods.

The following table presents the percent change in comparable sales for the threequarters and six months ended MarchJune 31,30, 2026 and 2025:

The following table presents the percent change in Systemwide sales for the threequarter and six months ended MarchJune 31,30, 2026:

Franchised sales are not recorded as revenues by the Company, but are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The following table presents franchised sales and the related increases/(decreases) for the threequarters and six months ended MarchJune 31,30, 2026 and 2025:

•Franchised margins for both periods reflected sales-driven growth across all segments and the positive impact of foreign currency translation in the International Operated Markets and the International Developmental Licensed Markets. Franchised margins represented more thanapproximately 90% of restaurant margin dollars.

•Company-owned and operated margins for both periods in the U.S. primarily reflected the impact of ongoing inflationary cost pressures, partly offset by sales-driven growth.pressures. The International Operated Markets primarily reflected sales-driven growth and the positive impact of foreign currency translation, partly offset by the impact of ongoing inflationary cost pressures.pressures for both periods.

•Total restaurant margins included depreciation and amortization expense of $455$454 million and $413$425 million for the threequarters ended 2026 and 2025, respectively, and $909 million and $839 million for the six months ended March 31, 2026 and 2025, respectively.

•Selling, general and administrative expenses increased $77$117 millionmillion, or 11%17% (9%16% in constant currencies) for the quarter and $193 million, or 14% (12% in constant currencies) for the six months. Results for both periods primarily reflectingreflected higher employee costs, including incentive-based compensation.compensation, and costs related to the 2026 Worldwide Owner/Operator convention.

•Selling, general and administrative expenses as a percent of Systemwide sales were 2.2% and 2.1% for both the threesix months ended MarchJune 31,30, 2026 and 2025.2025, respectively.