McDonald's Corporation

Hello and welcome to McDonald's Second Quarter 2026 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. Following today's presentation, there will be a question and answer session for investors. At that time, investors only may ask a question by pressing star 1 on their touchtone phone. I would now like to turn the conference over to Mr. Dexter Congbalay, Vice President of Investor Relations for McDonald's Corporation. Mr. Congbalay, you may begin.

Good morning, everyone, and thank you for joining us. With me on the call today are Chairman and Chief Executive Officer Chris Kempczinski and Chief Financial Officer Ian Borden. As a reminder, the forward-looking statements in our earnings release and 8 filing also apply to our comments on the call today. Both of those documents are available on our website, as are reconciliations of any non-GAAP financial measures mentioned on today's call. along with their corresponding gap measures. Following prepared remarks this morning, we will take your questions. Please limit yourself to one question and then re-enter the queue for any additional questions. Today's conference call is being webcast and is also being recorded for replay via our website. And now I'll turn it over to Chris.

Good morning, everyone, and thank you for joining us. Before Ian gets into the detailed results for the quarter, I want to do two things. Recap our progress under our Accelerating the Arches strategy and highlight how McDonald's remains positioned for long-term value creation and provide a snapshot of the quarter, what worked, what didn't, and what we're doing to address our opportunities. At the end of our prepared marks, I'll preview McDonald's Next in advance of our Investor Day. will also share some additional perspective on our leadership change in the US and why Skye Anderson's past accomplishments give me confidence that she's the right leader for this moment. Almost six years ago, we unveiled our Accelerating the Arches strategy to drive our next chapter of growth and build the foundation for our digital-first future. The strategy worked. We've grown system-wide sales roughly $40 billion and operating income by over $3 billion. We've done this by focusing on our three growth pillars. Our MCDs, as we like to call them. We maximize our marketing by leaning into our fans to create cultural moments that drove consumer engagement and restaurant traffic. As a result, over the last six years, our brand relevance with the critical U.S. Gen Z consumer has increased, and we now hold a significant advantage versus our primary competitor. The McDonald's brand remains one of one in our industry and among the most powerful brands in the world. We committed to our iconic core menu by focusing on our $17 billion brands with a particular focus on our critical beef, chicken, and beverage categories. We created a global category structure to increase our pace of innovation, and we're already seeing significant benefits from this focus, most notably in beverages. And we've doubled down on the four Ds in digital, We've built the industry's largest customer platform with nearly 220 million active loyalty users, and we're now among the largest loyalty programs in the world. In delivery, we've grown an efficient business with an industry-leading cost structure that generates more than $20 billion in annual system-wide sales. In drive-through, we've modernized operations and invested in technologies that have improved accuracy and reduced service times. and in development, we're well on our way to 50,000 restaurants, thanks to the most aggressive expansion of new restaurants in our history. All while keeping our existing restaurant estate among the industry's most modernized. As we've executed against these growth pillars, we've also done the hard work behind the scenes to integrate our systems for a digital first future. We're now close to having all our major markets on one app, One loyalty program, one pricing engine, one HR system, and one finance system. This will drive cost savings, accelerate innovation, harden security, and enhance stability. Critically, with all our data soon to be pooled in a global data lake, we'll also be well positioned to capitalize on the new opportunities afforded by artificial intelligence. You'll hear more about all of this at our Investor Day in September. Now that I've recapped the progress under Accelerating the Arches and highlighted our continuing efforts toward long-term value creation, I'm going to provide a snapshot of our second quarter. McDonald's system-wide sales grew 4% in constant currency, reflecting the growing contribution from new unit openings. Global comparable sales grew 1.3%, with positive comparable sales growth across each of our operating segments. Our international markets, which contribute more than half of our system-wide sales and operating profit, continue to demonstrate that our playbook is working. Strong execution and value offerings, menu innovation, and creative marketing across many of our international markets continue to resonate with customers and supported results that were broadly in line with our expectations. Turning to the U.S., After a solid start to the year, the business slowed significantly, posting comparable sales growth of 0.8% in the quarter. This was below our expectations and something we're going to address in greater detail on today's call. We don't have a strategy problem. We simply didn't execute at the level we needed to in the second quarter. Our execution opportunities fall into three buckets. First, although we've restored our overall value and affordability leadership, Our restaurant level results show that execution was inconsistent across the system. The strongest performing restaurants consistently executed our new everyday affordable price menu and delivered strong restaurant operations. We need that same level of execution in all our restaurants. Second, our restaurant teams were overwhelmed by too many deployments in the quarter, which led to less efficient restaurant operations. This impacted customer service times, and as service times went up, satisfaction scores went down. And third, our marketing programs didn't deliver against expectations. I'm going to turn the call over to Ian now to cover our results and these execution opportunities in greater detail.