McDonald's Corporation (MCD.US) Q3 Earnings Call: CEO Acknowledges Gap in U.S. Entry-Level Value, Says September Same-Store Sales Turned Positive and Expresses Confidence in Improvement Next Year

McDonald's Corporation (MCD.US) reported fiscal 2026 third-quarter results before market open on November 4, with earnings beating expectations but revenue slightly missing and U.S. same-store sales turning negative for the first time in five quarters, making it the focus of the call. Addressing pressure on the U.S. business, Chairman and CEO Chris Kempczinski acknowledged that entry-level value offerings "are not yet at a level we're satisfied with," calling it "the last piece of our value equation," and said the company will launch a national entry-level value program in early 2027; he stressed the company "is where we expected to be at Investor Day," expressed encouragement about improving U.S. baseline traffic trends in September and October, and said it continues to advance the "McDonald's > NEXT" long-term growth strategy. On the specific financial data, third-quarter adjusted earnings per share (EPS) were $3.57, up 11% year over year and above the consensus of about $3.38; global same-store sales rose 1.5%, slightly beating expectations; but revenue was about $7.16 billion, below the expected roughly $7.28 billion, and U.S. same-store sales fell 0.2%, ending five consecutive quarters of positive growth. After the release, McDonald's Corporation shares closed up 6.53% at $280.22 in the regular session that day. Focus and Response The core focus of the call was: with U.S. same-store sales turning negative for the first time in five quarters, how management would close the "entry-level value" gap and reverse domestic traffic. This issue directly bears on the market's judgment of McDonald's Corporation's 2027 recovery path and is the information investors most wanted confirmed behind the 6.53% single-day share price jump after earnings. In his opening remarks, Kempczinski made clear that the next priority for the U.S. business, "first and foremost," is "to finalize the last piece of our value equationentry-level products." He acknowledged the company had previously "not been at a level we're satisfied with" in this area and called it a key reason U.S. results missed expectations in the second quarter. Management has launched an eight-week test of an entry-level value program covering about 1,900 restaurants, with another roughly 4,000 franchised stores having proactively launched similar bundles on their own; together that is more than 40% of the U.S. system. The company aims to launch a national program in early 2027. Kempczinski said that as the quarter progressed, U.S. comparable sales turned positive in September (July and August were slightly negative), and he was "encouraged" by improving baseline traffic trends in September and October. U.S. Market: Value Strategy Gap and Inflection Point Management attributed the 0.2% decline in U.S. third-quarter comparable sales (still +1.4% year to date) to earlier low-price menus drawing fewer customers than expected. CFO Ian Borden said the company reversed baseline traffic trends during the quarter by partially restoring national digital offers and redirecting marketing resources to proven value tools such as Extra Value Meals (EVM). Kempczinski stressed the company is already well positioned on menu-board pricing and combo bundles, and that the real gap is entry-level valueespecially for low-income consumers. The company currently offers digital deals through its app to more than 45 million U.S. loyalty members and plans to lift visit frequency among high-frequency users with clearer offer bundles. International Markets: IOM Solid, IDL Growing, France and Ukraine a Drag International Operated Markets (IOM) comparable sales rose 1.4%, led by Australia and Germany, but France underperformed and the escalation of the war in Ukraine affected operating hours, both dragging on the total; excluding these two, IOM would have exceeded expectations this quarter. International Developmental Licensed Markets (IDL) comparable sales rose 4.2%, with all regions positive, led by Japan, which achieved its 44th consecutive quarter of positive same-store sales; China slowed amid a weak macro and consumer backdrop, but improved operating efficiency supported year-over-year profit growth. Management said it "held or gained share" in most major markets. Beverage Platform: A Sustainable Global Growth Engine Management positioned the specialty beverage platform as a sustainable global growth platform. Borden said tickets including specialty beverages are about 50% higher than the all-day average ticket, and most unit sales occur after lunch, clearly incremental. The Red Bull Dragonberry Energizer launched in August became the platform's best-selling item during its six-week promotional window and lifted overall category sales, with minimal cannibalization of Refreshers and craft sodas. Nearly 18,000 restaurants in the U.S., Germany, Canada and Australia have launched the platform; the company aims to capture an additional 1.5 percentage points of beverage market share by 2030 and plans to extend the platform to more than 7,000 additional restaurants in Europe by mid-2027. McDonald's > NEXT: Remodels, Hand-Breaded Chicken and Archy "McDonald's > NEXT" is a multi-year strategy focused on customer experience and operating efficiency. In early October, "Make It Golden" launched, which Kempczinski called "the largest capability-building initiative in the company's history," with the first wave of key leaders trained and a goal of covering more than 18,000 restaurants within the first quarter. On design, the company reimagined restaurant layouts and the "Arch IQ" operating platform, targeting a remodel pace of more than 5,000 restaurants per year by 2028 (the first international remodeled stores opened in Poland and Spain). Hand-breaded chicken has been piloted in the U.S. and Ireland, with a full advertising sales test (AST) at about 100 restaurants in several U.S. cities in early 2027 and a full national rollout in Ireland. The intelligent ordering system "Archy" is expanding testing at drive-thrus in the U.S. and Australia, targeting most U.S. restaurants by the end of 2027. Capital Allocation and Guidance: Refranchising, Capex and 2027 Inflation The company generated nearly $4.2 billion in restaurant profit this quarter, with a year-to-date adjusted operating margin of 48.3%. 2026 capital expenditure is expected at about $3.7 billion (the low end of the prior $3.7$3.9 billion guidance range). On new stores, full-year global openings are expected to be cut to 2,500 (from the original target of 2,600), with net additions still about 2,100. Refranchising is progressing steadily, with about 175 restaurants refranchised in the U.S. and IOM year to date, targeting 98% franchised globally by 2028. SG&A was 2% of system sales this quarter and is expected at about 2.2% for the full year. The company expects no foreign currency translation impact on adjusted EPS in the fourth quarter (at current rates). Kempczinski noted that 2027 food and packaging inflation remains in the mid-single digits, above historical trends, requiring pricing that balances inflation pass-through with value perception. Other Points French franchisees recently voted in favor of simplifying the market's governance structure, which management sees as a historic step expected to improve operating flexibility and agility, though recent protests still caused short-term disruption. In China, the fading of third-party delivery platform subsidies pressured delivery traffic, but the global delivery business still grew at a mid-to-high single-digit rate. According to earnings materials disclosed by multiple media outlets after the release, the company also committed about $8.5 billion in rent and capital support to franchisees to advance the NEXT remodel program (this figure was not disclosed in the call transcript and comes from external reporting on the earnings release). In addition, the company raised its quarterly cash dividend by 4% to $1.93 per share (source as above; not mentioned in the call transcript). Full Conference Call Transcript McDonald's Corporation (MCD) Q3 2026 Earnings Call Transcript Date: Wednesday, November 4, 2026 Participants Vice President, Investor RelationsDexter Congbalay Chairman and Chief Executive OfficerChris Kempczinski Chief Financial OfficerIan Borden Congbalay: Good morning, and thank you for joining. With me today are Chairman and CEO Chris Kempczinski and CFO Ian Borden. A reminder: the forward-looking statements in the earnings release and 8-K also apply to today's remarks. I'll turn it over to Chris. Kempczinski: Thank you, Dexter, and good morning. Today I'll start with the next steps we're taking to rebuild momentum in the U.S., Ian will detail the quarter's performance, and I'll close with an update on the systemwide rollout of "McDonald's > NEXT." In the third quarter, McDonald's Corporation delivered 1.5% global comparable sales and 4% system sales growth in constant currency, reflecting contributions from new store openings. International markets delivered another solid quarter, with most major markets continuing to execute well on value, menu and marketing despite a still-difficult consumer environment. U.S. performance improved as the quarter progressed, with comparable sales turning positive in September after being slightly negative in July and August. That improvement stemmed from a series of interventions launched during the quarter: restoring some digital offers to drive high-frequency customer visits, redirecting marketing resources to proven value platforms, and strengthening store-level execution. We're encouraged by the initial response but also clear that more work remains. The focus now is to consolidate the improvement and accelerate baseline performance through three additional interventions over the coming months: first, and most importantly, finalizing the last piece of our value equationentry-level products; second, activating our highest-frequency customers through more compelling digital offers; and third, reinforcing the flavor and quality credentials that are our greatest asset, including systemwide flavor, quality and hospitality training. On the U.S. value program, last week we began an eight-week test of two new everyday affordable price menu constructs across all dayparts at about 1,900 restaurants across multiple regions. We're testing a "mix-and-match bundle" (giving customers more choice and replicating the familiar "buy one, add one" ordering behavior) as well as a "fixed bundle" (offering a set combination at an attractive price and simplifying ordering). At the same time, franchisees representing about 4,000 additional restaurants have chosen to launch similar entry-level bundles ahead of the test. Together that is more than 40% of the U.S. system, reflecting strong consensus on the opportunity. We'll use the test results to determine which structure customers prefer most, operates best, and delivers sustainable incremental traffic and sales for franchisees. The goal is a national launch of the new program in early 2027. We've made significant progress on overall value, with value and experience scores improving across our top ten markets. Our base menu pricing on the most popular categorieschicken, beef, beveragesis generally below neighboring competitors. Our $5 and $6 meal deals remain an industry benchmark, and the Extra Value Meals (EVM) on everyday fan-favorite items have become a proven incremental platform. We offer a broad mix of digital deals through our app to more than 45 million U.S. loyalty members. The goal is clear: every time customers consider McDonald's Corporation, they should see a clear and compelling value propositionwhether an affordable single item, a complete meal, or a digital offer in the app. In summary, we are where we expected to be at Investor Day. We're taking the right steps to improve near-term U.S. performance, and we're encouraged by baseline traffic trends in September and October. At the same time, beverages continue to perform well and contribute incremental ticket growth. I'll turn it over to Ian. Borden: Thank you, Chris, and good morning. Third-quarter global comparable sales grew 1.5% in a weak consumer environment, particularly in Europe. Despite that environment, we held or gained share in most of our top markets. In the U.S., comparable sales fell 0.2% this quarter and are +1.4% year to date. As Chris said, sales improved as the quarter progressed, turning positive in September, driven by measures that stabilized baseline traffic during the quarter. One step was partially restoring broader regional and national digital offers to drive active-member frequency and reactivate new and lapsed membersfor example, a $2 breakfast sandwich or free fries with a $1 purchase. The initial response to these mass digital offers exceeded expectations on incremental traffic and sales and reversed the baseline decline seen in the second quarter and early third quarter. The second step was redirecting marketing resources to "off-peak entry-level bundles" and EVMproven value tools. Since relaunching EVM more than a year ago, sales of top EVM items are up about 7% year over year and continue to drive incremental traffic, higher average tickets and margins. Nationally priced products at quarter-end (the $5 Sausage McMuffin with Egg meal and the $8 Big Mac meal) continued the trend. The U.S. is also testing additional entry-level value items, expected to launch in early 2027 to supplement existing strong value offerings. On menu, the new specialty beverage platform continued to perform well this quarter, delivering clear incrementality through strong repeat and acceptance. Tickets including specialty beverages are about 50% higher than the all-day average ticket, and most units are sold after lunch. The Red Bull Dragonberry Energizer added in August gave the platform a lift with minimal cannibalization of Refreshers and craft sodas; during its six-week advertising window it became the platform's best-selling item and lifted overall specialty beverage category sales. International Operated Markets (IOM) comparable sales grew 1.4%, led by Australia and Germany, with most top markets holding or gaining share; IOM growth slowed slightly versus the second quarter, mainly reflecting continued underperformance in France and the impact of the escalating war in Ukraine on operating hours. Excluding these two, IOM would have exceeded expectations this quarter. On value, Australia expanded new price tiers on the McSmart platform; Germany and the U.K. strengthened family-friendly affordable platforms. On menu innovation, Australia's specialty beverage launch in July far exceeded expectations; Canada's Red Bull energy drink launch exceeded unit sales forecasts; Germany launched its first specialty beverage limited-time item, the Italo Spritz. Results in the U.S., Canada, Germany and Australia reinforce our confidence that specialty beverages can become a sustainable global growth platform under "McDonald's > NEXT" and help capture an additional 1.5 percentage points of beverage market share by 2030. We remain on track to extend specialty beverages to nearly all European markets by mid-2027 and to more International Developmental Licensed Markets (IDL). Another global growth platform, large beef burgers, also has momentum: Australia's Quarter Pounder innovation exceeded expectations; Germany's Big Arch platform continued strong; the U.K. and Spain also launched Big Arch. On marketing, "Menu Heist" used global scale to bring international menus to local markets, with strong sales and traffic in Germany and CanadaGermany had one of the highest sales weeks in its history; the U.K. launched in late September, with early social media trends showing strong customer excitement. Most major IOM markets executed well, but France continued to underperform, which Chris will discuss later. International Developmental Licensed Markets (IDL) comparable sales grew 4.2%, with all regions positive. Japan led, having achieved 44 consecutive quarters of positive same-store sales; IDL growth was dragged by China's weak macro and consumer environment, but the China team's improved operating efficiency supported year-over-year profit growth. On the corporate P&L, top-line performance drove adjusted EPS of $3.57 (including a $0.01 foreign currency translation headwind); in constant currency, adjusted EPS grew 11% year over year. At current rates, we expect no foreign currency translation impact on adjusted EPS in the fourth quarter (directional guidance; rates may change). The third quarter generated nearly $4.2 billion in restaurant profit; year-to-date adjusted operating margin was 48.3%, reflecting higher other operating income (including higher gains on restaurant sales from refranchising). We're progressing steadily toward our goal of 98% franchised globally by 2028, with about 175 restaurants refranchised in the U.S. and IOM year to date. SG&A was 2% of system sales this quarter and is expected at about 2.2% for the full year. As discussed at Investor Day, our investments in the global system, shared capabilities and high-quality enterprise data are expected to improve SG&A ratio efficiency starting in 2027. On new stores, we remain disciplined, with full-year global openings now expected at 2,500 (from the original target of 2,600) and net additions still about 2,100. 2026 capital expenditure is expected at about $3.7 billion (the low end of the prior $3.7$3.9 billion guidance), reflecting slightly fewer openings in owned markets and currency effects. In summary, third-quarter results are consistent with the trajectory we previously outlined for the U.S. business, and most international markets remain solid. We're encouraged by the improvement in U.S. baseline trends during the quarter and are focused on positioning for stronger, more consistent performance in 2027. At the same time, we'll continue to invest at scale in "McDonald's > NEXT." I'll turn it back to Chris. Kempczinski: On France, a few weeks ago French franchisees voted in favor of a clear and holistic path forward, including simplifying the market's governance structure to improve flexibility and agility. This was a historic vote, and I thank franchisees for their partnership. Although recent protests still cause short-term disruption, we are now better positioned to drive growth with stronger marketing support and the right mix of innovation, value and execution. Six weeks ago at our Investor Day in Chicago, we detailed "McDonald's > NEXT." At its core is improving the customer experience while making restaurants easier to run and more efficient. Our ambition is simple: to be the first choice more customers choose more often. Franchisees, suppliers and employees across the system are actively engaged and exchanging ideas. "NEXT is now" is our internal rallying cry. In early October, on Founder's Day (Ray Kroc's birthday), we launched "Make It Golden"the largest capability-building initiative in our history, focused on great-tasting food and hospitality that is distinctly McDonald's Corporation. In the first month we completed the first wave of training for key leaders, with a goal of covering more than 18,000 restaurants within the first quarter. The beverage platform is also progressing well, with nearly 18,000 restaurants in the U.S., Germany, Canada and Australia generating incrementality, and plans to extend to more than 7,000 additional restaurants in Europe by mid-2027. Hand-breaded chicken has begun operational pilots in the U.S. and Ireland; in early 2027 a full advertising sales test will begin at about 100 restaurants in several U.S. cities, with a full national rollout in Ireland. Remodeled NEXT restaurants have opened globally, with the first international stores opening in Poland a few weeks ago and then Spain; we're on pace for hundreds of U.S. remodels in 2027 and more than 5,000 globally per year by 2028. We're also expanding testing of the "Archy" intelligent ordering system at drive-thrus in the U.S. and Australia, targeting most U.S. restaurants by the end of 2027. That's NEXT in action. Q&A Session Morgan Stanley's Brian Harbour: On recent conversations with franchiseesis there consensus in the U.S. on value and on making it the main lever in early 2027? Second, on NEXT, are they accepting the required investment and timeline disclosed in September, and any update? Kempczinski: On value, I have strong conviction and there's strong consensus around focusing on "entry-level value" as the last unsolved piece of our value equationwhich is why about 40% of the U.S. system is already doing some version of an entry-level value program (some testing, some franchisees launching ahead of test results). We're in good shape on the rest of value. On NEXT, there have been many conversations with franchisees, but broadly they 100% agree on improving the customer experience and on flavor, quality and hospitality, and 100% agree on making restaurants easier to run and more efficient. Our system always discusses the "how." Take remodels: in the U.S. a team is going through the remodel list line by line, and will surely find optimization opportunities; we expect to ultimately reach a remodel plan all parties are satisfied with. On hand-breaded chicken, we've set an AST for early 2027 in two cities; last week I met with franchisees in Ireland to prepare hand-breading. Overall I feel good about where franchisees are on NEXT; they're appropriately engaging on the "how," and we'll continue to share progress through 2027. UBS Group AG's Dennis Geiger: U.S. trends improved after the interventionscan you talk about the U.S. sales trajectory for the rest of the year and your high-level view of 2027 (interventions and NEXT benefits)? Borden: Going back to what we said on the second-quarter callwhat we did and what we saw in the third quarter both confirm the path we outlined then: focusing on putting the U.S. in a stronger position at the end of 2026. We feel good about what the U.S. system has collectively executed, we're encouraged by improving baseline traffic trends in September and October, and we're confident the U.S. exits 2026 in a stronger position. On IOM, most major international markets are holding or gaining share; the environment is weak but we're executing well. Looking to Q4, we expect conditions similar to those seen in the third quarter for the rest of the year. JPMorgan's John Ivankoe: I've visited a fully operating store with hand-breaded chicken and was impressed. The question is whether the hand-breaded chicken platform should focus more on major upgrades like sandwiches and tenders rather than entering the higher-risk bone-in wings category (recalling Mighty Wings a decade ago)? Kempczinski: These are exactly the details we're digging into with franchisees. Last week in Ireland, about 10 restaurants compared "tenders + sandwich" against "tenders + sandwich + wings." Early days (only 10 stores) show wings bring strong incrementality, but it's early. What we need to learn is whether the operational complexity of three items exceeds their incremental benefit. Borden: We've done extensive "menu architecture" research, and ultimately customer demand leads; we've had success with wings in multiple markets globally, and it is indeed an opportunity area. Bank of America Corp's Sara Senatore: A clarification on the model and "Make It Golden"are you changing the metrics by which you measure franchisees (the PACE metrics are known)? Second, IOM refranchising gains are healthy; what's your view on the impact on rent and royalties? Kempczinski: We're focused on how we assess flavor and quality, which is a key part of the system upgrade. In "Make It Golden" training, the most notable change is strengthening the customer feedback loop: food safety and employee-related assessments are unchanged, but in Q4 we're launching a new customer satisfaction measurement approach in the U.S. and taking it global; by the end of Q4, customers will be able to rate their experience directly in the app. Flavor and quality are ultimately determined by customer perception, and we're significantly increasing the visibility and accuracy of feedback. Borden: Gains are up this year as part of NEXT's path to 98% franchised by 2028; about 175 restaurants have been refranchised in the U.S. and IOM year to date in 2026, and we expect that activity to continue over the coming years. On the model, it affects revenue (one reason Q3 revenue was slightly lower, as 100% of revenue converts to franchise revenue). We're confident in the path to 98% by 2028. TD Cowen's Andrew Charles: Ian, just to confirmare you saying Q4 U.S. same-store sales will improve versus Q3? Chris, in the past you've quantified U.S. franchisee support for initiatives (like the EVM reset last September); how is support for the NEXT investment currently? Borden: I didn't say Q4 U.S. same-store sales would be better. I said we're encouraged by improving baseline trends in September and October, and that we're on the consistent path of "putting the U.S. in a stronger position at the end of 2026." Kempczinski: The support NEXT provides varies by country; U.S. owner-operators are working with Skye on the composition of capital and rent, and the partner program isn't finalized, but the overall investment framework disclosed at Investor Day is unchanged. Evercore's Dave Palmer: On the U.S. same-store outlook and go-to-market"Make It Golden" and the value tests show you're adjusting your go-to-market approach. The 2025 chicken launch and this year's value changes followed by "rework" have investors concerned about franchisee alignment and hit rates; what have you changed, and why do you think hit rates will improve? Kempczinski: This is a topic you and I have discussed. Our go-to-market includes testing, and the key is balancing "one-way doors" and "two-way doors"irreversible, important decisions must be gotten right, and we're extremely rigorous about test duration, restaurant counts, etc. (several NEXT elements follow this path). In some areas we're ready based on global experience and proceed directlylike EVM a year ago, which we did without testing and which proved right. In the U.S. we're currently testing multiple entry-level value approaches, but there's consensus on "focusing on entry-level value" as the last gap. We're always communicating with franchisees; there's no one-size-fits-all, and the key is the scale and durability of the decision. Bernstein's Danilo Gargiulo: A clarificationhow much are current protests affecting results (there are rising protests in major IOM markets)? The real question is IOM: holding or gaining share in most IOM markets is encouraging, but with macro pressure rising and high CPI in some countries, do you expect IOM to still deliver positive same-store sales next year? How much is controllable versus not? Kempczinski: There is indeed a lot of dynamism in Europe, and we specifically called out France and Ukraine as two market drags in our commentary. Both countries have significant external issues, and we expect the impact to last at least through Q4, with hopes of improvement in 2027. On macro, Europe is indeed weak, but our focus is always on winning shareholding or gaining share in most markets, which is exactly the basis on which we're positioning for 2027. Borden: To add and emphasize, results in most top IOM markets are consistent, showing they're executing the playbook and the playbook is working; what needs fixing is France. The French governance vote is significant progress that will improve operating efficiency and agility and help us land the right plan in 2027. BTIG's Peter Saleh: Can you detail the eight-week value test, what you've seen so far, how you'll measure success, and why EVM discounts aren't enough and more is needed? Kempczinski: The test only started last week, so it's too early to talk results after one week. We'll measure it by incrementality and whether it drives incremental sales (ultimately driving franchisee economics), and look at acceptance. As for why EVM isn't enough, it comes back to the three elements of value: menu-board pricing (we're already well positioned), combo bundles (EVM and the $5/$6 meals put us in a good position), and good entry-level valueespecially low-income consumers need strong entry-level value, and we previously "were not at a level we're satisfied with." We didn't land it well in the second quarter, which is exactly what the current test addresses; we expect answers in early 2027, when the full value set will be in place. Borden: IOM markets have had all three elements in place and proven for a long time, which is one of the fundamental drivers of their consistent share gains; value is a core component. Citi's Jon Tower: A deeper dive on the U.S. beverage platformwhat kind of customers are you attracting, and where from? Afternoon performance is good and it isn't cannibalizing the existing specialty platform, but could it cannibalize other beverages on the menu? Going forward, do you need to rotate the "new item wheel" faster than the base menu? Borden: We're seeing very consistent results in every market where it's deployed, which is why we firmly believe this is a multi-year growth platform and can achieve the 1.5% share gain set at Investor Day. In the U.S. specifically, more than half of consumption occasions are after lunch, when restaurants are less busy, strongly confirming incrementality; tickets including beverages are about 50% higher than the all-day average, with strong food attachment. The customer base skews younger, fitting the category's key consumers. New news is of course important (Germany's Aperol Spritz was the best performer this quarter), but we prioritize a base layer of "delicious, high-quality, everyday choice, great value" and then rotate new items moderately. Some cannibalization is inevitable, but the focus is clear incrementalitybeverages bring incremental visits and sales, i.e., incremental profit. Kempczinski: One addition: over the long term we do need to offer a richer beverage lineup; one of the biggest investments in the NEXT remodel is expanding back-of-house space for the "beverage cell" to support a richer beverage lineup in the future. Jefferies Financial Group Inc.'s Andy Barish: Your marketing strengths are significant, but the messaging seems not to "cut through"what changes are you making in channels and messaging? Kempczinski: We agree marketing hasn't been up to the standard McDonald's Corporation should have, which is exactly what Skye and the team are working on; at Investor Day we talked about "Consumer > NEXT" and changing how we generate demand, emphasizing that as one of the world's largest brands McDonald's Corporation can generate "talk value" others can't match, and we hadn't fully unleashed it to drive brand loveyou'll see us do more and more of that in the coming years. Baird's Chris O'Cull: How is progress on aligning with franchisees on pricing across the full menu (not just advertised value)? Also, you previously said Q4 system pricing would be mid-single digitsis that still the plan? Kempczinski: We're always talking pricing with franchisees, and the U.S. is in good shape overall apart from entry-level valuebase menu pricing is generally at a discount to competitors in the trade area, and we're satisfied with that; for 2027 we still expect mid-single-digit food and packaging inflation (above historical levels), requiring a careful balance between inflation pass-through and value leadership. Oppenheimer's Brian Bittner: You mentioned restoring national digital offers to fix baseline salescan you describe the business size or the impact when done right? Also, how are low-income consumers doing lately (some peers say the group improved for the first time this year)? Borden: Digital offers are extremely important for our high-frequency users and loyalty members. U.S. loyalty members are already nearly 30% of the customer base and an important part of it; frequency rises about 2.5x in the 12 months after joining. Connecting these customers and offering clear, compelling deals is important, and we've made progress but still have work to do. Kempczinski: Digital offers matter because they target our highest-frequency customersabout a third of sales are digital, with the app (i.e., members) the majority; high-frequency customers drive most sales and are highly sensitive to digital offers. Earlier changes to key digital offer elements hurt high-frequency customers, and Skye and the team have restored the main gaps and continue to discuss with franchisees how to better reward high-frequency customers. Guggenheim's Greg Francfort: Can you talk about delivery? China was weak this quarter partly due to aggregator pullback; how is the delivery experience in the U.S. and key IOM markets, and is it still growing? Kempczinski: In China there was indeed a major third-party pullbackthere had been an anomaly where delivery was cheaper than dine-in (requiring heavy subsidies), which has now reversed, dragging on China and broader market traffic, and we were affected too. But global delivery is still growing (mid-to-high single digits), and given our store density and location advantages, McDonald's Corporation is a preferred partner brand for delivery platforms, with delivery share continuing to rise; amid cost-of-living pressure, both we and the platforms need to be prudent about fees. Delivery overall continues to grow broadly. KeyBanc's Chris Carril: How does single-store operating cash flow this year compare with the $500,000 level mentioned at Investor Day? On the cost outlook, you mentioned mid-single-digit food and packaging inflation in 2027how does that affect the value initiative conversation with franchisees? Kempczinski: On the pricing conversation, U.S. leadership franchisees were at headquarters this week discussing it, and there's broad consensus on "landing the right value program in this environment," which is exactly the purpose of the entry-level value test; the commitment is unwavering, and what remains is the "how." Mid-single-digit inflation in 2027 requires us to stay agile and use our RGM team to get clearer pricing on key value items. On cash flow, I don't have the latest number, but it's broadly consistent with what we discussed, around $500,000, ultimately affected by Q4. Borden: To add, the most important thing driving franchisee and our own bottom line is getting business momentum back to where we want it; the U.S. system is focused on that, the 2027 plan is being worked deeply, and the focus is the strongest top-line growth in this environment. Closing Remarks Congbalay: Thank you all; that concludes the Q&A. For follow-up questions, please email McDonald's Corporation IR or me. Operator: That concludes the McDonald's Corporation investor call; you may disconnect.