McDonald's Investor Day: Value Menu Push and $900M Remodel Bill

McDonald's stock has fallen 18% over the past 12 months, wiping its market value down to roughly $175 billion, and on Wednesday in Chicago the company's executives will try to stop the slide at their first investor day in nearly three years.

CEO Chris Kempczinski, U.S. President Skye Anderson and the rest of the leadership team are expected to fill in the details of McDonald's > NEXT, the global growth plan the company unveiled in June at its biennial worldwide franchisee convention. The plan rests on a new restaurant design, better-tasting food and drinks, and consumer-led innovation. Executives have held back specifics until now.

The stakes are high. McDonald's U.S. same-store sales rose just 0.8% in its most recent quarter, and traffic fell. Kempczinski blamed execution — including a mixed rollout of value offerings — rather than the chain's underlying strategy. Anderson took over as president of the U.S. business after the weak quarter. The S&P 500, by contrast, has climbed 16% in the same 12-month span, as optimism about artificial intelligence offset worries about consumer finances.

Investors are skeptical the fast-food giant can win back diners near term. Four themes dominate expectations for Wednesday's presentation.

Value, and franchisee discipline. Value has become decisive for restaurant chains fighting over a smaller pool of customers who weigh both price and experience. Taco Bell and Chili's have thrived; McDonald's has struggled as its value messaging got lost among other promotions. Franchisees have pushed back on discounts, which lift sales but squeeze operator profits, especially with high beef prices raising costs. Only about two-thirds of U.S. franchisees implemented the recent "under $3 menu," executives said in August. McDonald's lets franchisees set their own prices but assesses whether those prices deliver value.

"We expect MCD to use this event to make it clear to franchisees that adherence to pricing recommendations will be a key factor in evaluating agreement renewals," Citi Research analyst Jon Tower wrote in a note to clients. Tower cut his price target on the stock to $310 per share from $345, citing investor concern about franchisee buy-in for the overall strategy.

Menu upgrades, led by chicken and drinks. McDonald's has shifted its menu toward chicken as beef prices rise and rivals such as Chick-fil-A threaten its sales. At the franchisee convention, executives said the next evolution of its chicken will be hand-breaded — the technique Chick-fil-A, Raising Cane's and Popeyes already use, producing a crispier exterior at the cost of more time and labor. The company has also expanded beverages since winding down CosMc's, its drink-focused spinoff, rolling out crafted sodas, refreshers and energy drinks in the U.S., with markets like Germany adding more drink options.

"What's important — we'll talk a lot more about this at investor day — is beverages," Chief Financial Officer Ian Borden said on the company's August earnings call.

A new remodel cycle. Roughly every decade, McDonald's requires franchisees to remodel restaurants to new aesthetic and technology standards, and another round appears to be coming under the growth plan. Franchisees saw the new design first at the convention. McDonald's typically chips in support, but operators fund the bulk of remodels at a time of elevated borrowing costs — and tariffs plus high energy prices are pushing construction costs up too.

The remodel program could raise McDonald's capital expenditures by $600 million to $900 million in 2027 and 2028 versus projected 2026 spending, BMO Capital Markets analyst Andrew Strelzik wrote in a research note. Executives are expected to give the company's own cost projections on Wednesday.

Cost cuts to offset the spending. Borden said in August that McDonald's will share its outlook for general and administrative spending at the event. Bernstein analyst Danilo Gargiulo wrote that the company could target G&A below 2% of systemwide sales, down from the current 2.2% goal. The workforce has already shrunk under a reorganization. McDonald's will also cut costs indirectly by refranchising company-owned restaurants, shedding their operating expenses and capital requirements, with more detail promised at investor day.

Wednesday's event will show whether Kempczinski and Anderson can convince franchisees to fund the plan — and investors that the strategy's problem really was execution.