Slide 1: McDonald's Corporation Investor Overview
McDonald’s Corporation Investor Overview
Slide 2: Important Disclaimers
Important Disclaimers This presentation contains financial measures that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), including Systemwide sales, free cash flow conversion and adjusted operating margin. Systemwide sales include sales a
Slide 3: McDonald's strategic evolution…
McDonald’s strategic evolution… 1950s 1960s, 1970s & 1980s Kroc meets brothers Dick and Mac McDonald at McDonald’s Corporation buys the exclusive rights their restaurant in San Bernardino to the McDonald’s name and operating system from Kroc becomes the national franchising agent for the McDonald br
Slide 4: …continues to meet customer needs over time
…continues to meet customer needs over time 1990s & 2000s 2010s & 2020+ The McFlurry is invented and launched in Canada Turnaround plan announcement (re-franchising, Accelerated unit growth with continued cost savings) international expansion Velocity Growth Plan corporate strategy to focus on Plan
Slide 5: McDonald's Senior Leadership Team
McDonald’s Senior Leadership Team Chris Kempczinski President and Chief Executive Officer 7 Years at McDonald’s Skye Anderson Jon Banner Ian Borden Heidi Capozzi Joe Erlinger Morgan Flatley Marion Gross President, Executive Vice President, Executive Vice President, Executive Vice President, Presiden
Slide 6: McDonald's Board of Directors Roster and Committees
McDonald’s Board of Directors Roster and Committees Enrique Hernandez, Jr. Anthony Capuano Kareem Daniel Lloyd Dean Independent Chairman CEO, Former Chairman, Chief Executive Emeritus and Founding Executive, Executive Chairman, Marriott International, Inc. Disney Media and Entertainment Distribution
Slide 7: The World's Largest Restaurant Company
McDonald’s The World’s Largest Restaurant Company 40K+ 2.2M 100+ 65M+ Restaurants People Countries Customers Working for McDonald’s Served every day or Franchisees 7
Slide 8: The McDonald's System
The McDonald’s System The three-legged stool of McDonald’s franchisees, suppliers, and employees Franchisees Suppliers Employees 95% of McDonald’s restaurants Many recognize McDonald’s as 1 in 8 Americans have worked at are locally owned and operated, having the most integrated, a McDonald's restaur
Slide 9: McDonald's Business Model
McDonald’s Business Model Revenues from rent, royalties and initial fees and profits from directly operating restaurants Conventional License Developmental License Foreign Affiliated McOpCo ~55% of Restaurants ~20% of Restaurants ~20% of Restaurants ~5% of Restaurants Investment $ Profits Investment
Slide 10: McDonald's Global Business Operates Under 3 Segments
McDonald’s Global Business Operates Under 3 Segments U.S., Intl Operated Markets, and Intl Developmental Licensed Markets & Corporate International International U.S. Market Operated Markets (IOM) Developmental Licensees & Corporate (IDL) McDonald’s largest market in +20 markets or countries +75 mar
Slide 11: McDonald's Segment Breakdown
McDonald’s Segment Breakdown U.S. and IOM segments are +85% of FY’22 revenue and adj. operating income*** 10% 13% 25% 33% 42% 41% 41% 43% 49% 44% 34% 25% Restaurants* FY’22 Systemwide Sales** FY’22 Revenues FY’22 Adj. Operating Income*** U.S. IOM IDL * As of 12/31/2022 ** Systemwide sales is a non-G
Slide 12: U.S. Segment
U.S. Segment Unrivaled drive-thru presence and strong unit economics with a 95% franchised ownership mix* Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants (In millions U.S. $) $5.5M 100% 95.1% 95.2% 95.2% 95.1% 94.8% 90% 95% of Restaurants $0M have a Drive Thru 80% 2018 2019
Slide 13: IOM Segment
IOM Segment* Powerful brand presence and largely reimaged asset base with an 89% franchised ownership mix** 10% 13% 14% 28% 24% 33% 14% 11% 11% 15% 20% 18% 20% 21% 14% 14% 10% 10% Restaurants** FY’22 Revenues FY’22 Adj. Operating Income*** Australia Canada France Germany U.K. Other * Reflects the sa
Slide 14: IOM Segment
IOM Segment High average unit volumes across markets Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants (In millions US $) $5.5M 100% Australia 85% Canada 75% France 80% 90% 89.1% Germany 75% 84.0% 83.7% 83.6% 82.9% U.K. 70% 80% $0M 2018 2019 2020 2021 2022** * As of 12/31/2022
Slide 15: IDL Segment
IDL Segment Geographically diverse segment comprised primarily of developmental licensees with a 98% franchised ownership mix* 10% 12% 17% 15% 13% 50% 19% 7% 10% 68% 65% 14% Restaurants* FY’22 Revenues FY’22 Adj. Operating Income** Asia Europe Latin America Middle East * As of 12/31/2022 ** Excludes
Slide 16: IDL Segment
IDL Segment Highly franchised segment Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants (In millions US $) $5.5M 100% 97.6% 97.9% 98.0% 98.1% 98.1% Brazil 40% China 15% 90% Japan 50% 80% $0M 2018 2019 2020 2021 2022 * As of 12/31/2022 16
Slide 17: Evolution of Accelerating the Arches Strategic Plan
Evolution of Accelerating the Arches Strategic Plan Additions of Restaurant Development and Accelerating the Organization For more information on McDonald’s strategy, see the Accelerating the Arches page of the McDonald’s website 17
Slide 18: McDonald's Purpose
McDonald’s Purpose To feed and foster communities Serving & Sourcing Supporting Empowering Protecting Our Quality, Safe Food Communities People Planet Working toward Helping feed and support Serving up bright futures Helping to drive climate responsibly sourcing people when and where in communities,
Slide 19: McDonald's Impact and Progress
McDonald’s Impact and Progress McDonald’s continued to have a positive impact on people and the planet Serving & Sourcing Supporting Empowering Protecting Our Quality, Safe Food Communities People Planet Removed 100% of artificial In total, McDonald’s, 25% of our U.S. systemwide +99% of primary comm
Slide 20: McDonald's Values
McDonald’s Values The backbone of our Brand is a commitment to a set of core values that define who we are and how we run our business and restaurants Serve Inclusion Integrity Community Family We put our customers We open our doors We do the right We are good We get better and people first to every
Slide 21: Maximize Our Marketing Growth Pillar
Maximize Our Marketing Growth Pillar Tapping into the rituals and memories that are already special to McDonald’s fans Value Proposition Enduring Marketing Programs Elevated Marketing Meet customer needs in Fan Truths that build on Partnerships with on-trend challenging times customer affinity throu
Slide 22: Commit to the Core Growth Pillar
Commit to the Core Growth Pillar Global core menu items represent 60%+ of total sales and 75%+ of food sales Cultural Relevance Global Core Menu Menu Innovation Tap into customer demand for +10 brand equities with >$1B in Scaling emerging equities familiar favorites, like our World sales including t
Slide 23: Double Down on the 4Ds Growth Pillar
Double Down on the 4Ds Growth Pillar Unlocking growth by delivering a personalized and convenient customer experience Digital Delivery Drive Thru ~40% of 2022 Systemwide Delivery is in ~100 markets, +26K drive thru locations globally, sales* in McDonald’s top six representing 85% of restaurants incl
Slide 24: Foundation
Foundation Speed, accuracy, friendliness, and quality are correlated with business performance PACE Customer Satisfaction Speed of Service Grading and consulting program Customer satisfaction improving Increasingly faster despite a more launched in nearly all major mid to high single digits overall
Slide 25: 2022 Global and Segment Comp Sales
2022 Global and Segment Comp Sales* Driven by continued execution of the Accelerating the Arches strategy 16.0% 13.3% 10.9% 5.9% Global U.S. IOM IDL * Reflects growth over the prior year 25
Slide 26: 2022 Global Financial Overview
2022 Global Financial Overview Strong growth over the last 5 years is a testament to the resilience of the Business Total Revenue Systemwide Sales* Free Cash Flow Conversion* +$2B +$22B $23B $118B 89% $21B $96B 2018 2022 2018 2022 2022 * Systemwide sales and free cash flow conversion are non-GAAP fi
Slide 27: Adjusted Operating Margin
Adjusted Operating Margin* Franchise margin represented nearly 90% of margin dollars in 2022, leading to operating margin leverage and continued business model stability Total Restaurant Margin $s Adjusted Operating Margin %* $15B 50% $13.1B 11% 44.8% $10.7B 43.1% $10B 16% 40% 89% $5B 84% $0B 30% 20
Slide 28: Capital Allocation Philosophy
Capital Allocation Philosophy Optimize and prioritize returning free cash flow to shareholders Invest in the Business Payout Dividends Repurchase Shares Reinvest in existing units and 46 consecutive years of Maintain a strong balance sheet build new units to drive growth dividend increases while rep
Slide 29: Capital Expenditures
Capital Expenditures Shift in capital expenditures from reinvestment to new units % Other 5% 4% 3% 2% 2% % New 18% 25% 33% 41% 45% % Reinvestment 77% 71% 64% 57% 53% 2018 2019 2020 2021 2022 Total Capital $2.7B $2.4B $1.6B $2.0B $1.9B Expenditures 29
Slide 30: Restaurant Openings
Restaurant Openings The pace of restaurant openings has increased 1.6K 1.5K 0.1K 0.1K 0.3K 1.2K 0.3K U.S. 0.0K IOM 0.3K 1.0K 0.0K 0.3 New Units (Gross) 1.2K 1.1K IDL 0.9K 0.7K 2019 2020 2021 2022* Net Openings 840 503 838 1,092 Net Unit Growth 2.2% 1.3% 2.1% 2.7% * Excludes the sale of the Company’s
Slide 31: Cash Returned to Shareholders
Cash Returned to Shareholders McDonald’s has consistently returned cash to shareholders via dividends and share repurchases over time $8.5B $8.6B $8.1B Dividends $3.3B $3.6B $4.2B $4.7B $4.8B $3.8B $3.9B Share Repurchases $5.2B $5.0B $3.9B $0.9B $0.9B 2018 2019 2020* 2021* 2022 Free Cash Flow 71% 95
Slide 32: Capital Structure
Capital Structure McDonald’s maintains a strong investment grade credit rating $37.4B $35.6B $35.9B $34.3B $31.1B Total Debt $ 2018 2019 2020 2021 2022 Debt/EBITDA 3.1x 3.3x 4.2x 3.0x 2.9x Moody’s Rating Baa1 Baa1 Baa1 Baa1 Baa1 Stable Outlook S&P Rating BBB+ BBB+ BBB+ BBB+ BBB+ Stable Outlook 32
Slide 33: Total Shareholder Return Performance History
Total Shareholder Return Performance History McDonald’s TSR has exceeded market indexes on a 1 year, 3 year and 5 year basis 1-Year 3-Year CAGR 5-Year CAGR Jan’22 – Dec’22 Jan’20 – Dec’22 Jan’18 – Dec’22 McDonald’s 0.5% 12.7% 11.5% DJIA Median* -6.9% 7.3% 8.4% S&P 500 Median** -11.9% 7.8% 9.1% As of
Slide 34: 2023 Outlook
2023 Outlook* Based on current conditions, the following is provided to assist in forecasting the Company's future results • The Company expects net restaurant unit expansion will contribute nearly 1.5% to 2023 Systemwide sales** growth, in constant currencies • The Company expects full year 2023 se
Slide 35: Appendix: GAAP Reconciliations
Appendix: GAAP Reconciliations Adjusted Operating Income & Adjusted Operating Margin (dollars in millions) 2022 2018 Operating income $9,371 $8,823 Russia sale charge 1,281 - Dynamic Yield sale gain (271) - Strategic restructuring charges - 94 Impairment charges - 140 Adjusted operating income $10,3
Slide 36: Appendix: GAAP Reconciliations
Appendix: GAAP Reconciliations Free Cash Flow & Free Cash Flow Conversion (dollars in millions) 2022 2021 2020 2019 2018 Cash provided by operations $7,387 $9,142 $6,265 $8,122 $6,967 Less: Capital expenditures 1,899 2,040 1,641 2,394 2,742 Free cash flow $5,488 $7,102 $4,624 $5,728 $4,225 Net incom