McDonald's to Spend Up to $8.5 Billion on Franchisee Upgrades, Targets Higher Margins

The plan builds on McDonald's > NEXT, the growth strategy the company unveiled in June. Its pillars include a new restaurant design, better-tasting food and drinks, consumer-led innovation and improved hospitality from employees. Until Wednesday, executives had offered few details about how they would implement the strategy or how it would affect financial results in the coming years.

A key part is restaurant remodels, which McDonald's requires of franchisees roughly every decade. The chain also unveiled Restaurant > NEXT, which includes improvements to equipment, technology and operations. It features ArchIQ, an artificial intelligence-powered operating system for restaurants.

The upgrades will require steep investment from franchisees. McDonald's said it plans to provide financial support through rent relief and capital. About $5 billion of the support is expected through 2030. The company projects $1.5 billion to $2 billion in capital spending from 2027 through 2030 to accelerate NEXT, in addition to about $3 billion every year on typical capital expenditures. In 2025, McDonald's reported $3.4 billion in capital expenditures.

Franchisees may protest the company's expectations for their own investment, on top of standard cosmetic remodels, as beef and labor costs already weigh on their profits. Executives think the upgrades will pay off. McDonald's projects that efficiency improvements will increase annual cash flow by roughly $100,000 for the average U.S. restaurant, and the initiative will take about four years to return franchisees' investment.

While McDonald's plans to spend more on restaurant improvements, it aims to cut costs elsewhere, though it did not offer specifics. By 2030, the company is targeting an operating margin in the low-to-mid 50% range. In 2025, it reported operating margins of 46.1%, according to company filings. Some margin expansion is expected to come from general and administrative spending. By 2030, McDonald's projects about 1.9% of system-wide sales will go toward G&A, compared with a current forecast of 2.2% in 2026.

McDonald's also wants to grow global sales. Next year, the company expects restaurant openings to make up about 2.5% of system-wide sales growth. Its accelerated expansion will slow in later years. By 2030, new restaurants are expected to account for only about 2% of growth to system-wide sales. In recent years, the burger chain has leaned into chicken and beverages to drive sales. By 2030, it wants to grow global market share in those two categories by about 1.5 percentage points each. It still plans to hold onto its leadership in beef.

To support consistency and customer service, McDonald's will roll out "Make It Golden," a multi-year employee training program, beginning Oct. 5. That date is the 124th birthday of Ray Kroc, who turned the burger restaurant into a global giant.

Separately, McDonald's is testing advertisements on its drive-thru menu as part of a limited pilot at company-owned restaurants, according to a report from Bloomberg. Drive-thru locations in the test will show ads from other brands on digital menu boards after a customer places an order, which they will see while waiting for their meal. A McDonald's spokesperson told Bloomberg the test allows the company to explore "ways to share post-purchase content that customers may find helpful, relevant, or interesting." McDonald's did not immediately respond to The Verge's request for comment. Selling ads on menu boards could open another revenue stream for the company, which is facing falling U.S. sales, Bloomberg noted.

McDonald's has also revealed plans to move forward with its AI-powered ArchIQ assistant, which The Verge reported has recently shown identifying repeat customers and "remembering" their orders. CEO Chris Kempczinski is scheduled to speak to CNBC's "Squawk on the Street" at 10 a.m. ET, according to CNBC.

Editor's Summary

McDonald's announced a multibillion-dollar plan to support franchisee restaurant upgrades, new margin targets, an AI operating system and a training program as it seeks to revive U.S. sales. The company is also testing drive-thru menu advertising and expanding its focus on chicken, beverages and global unit growth. The initiatives carry significant investment requirements for franchisees, while McDonald's projects efficiency gains and higher operating margins by 2030.