McDonald's to Spend Up to $8.5 Billion on Restaurant Overhaul

McDonald's told investors on Wednesday it will spend as much as $8.5 billion through 2036 to accelerate franchisee investment in its restaurant improvement plan — and Wall Street punished the stock anyway, sending shares down 6% in afternoon trading.

The announcement came at an investor presentation at the company's Chicago headquarters, where executives filled in details of the McDonald's > NEXT strategy first unveiled in June. The plan rests on a new restaurant design, better-tasting food and drinks, consumer-led innovation and improved hospitality. Until Wednesday, executives had offered few specifics on implementation or financial impact.

The stakes are high. McDonald's U.S. business is trying to rebound from sluggish sales, and consumers battered by years of elevated inflation are visiting restaurants less often. CEO Chris Kempczinski told CNBC the company expects inflation and flat restaurant traffic overall to persist.

A centerpiece is "Restaurant > NEXT," a package of equipment, technology and operations upgrades layered on top of mandated roughly decade-long remodels. The new design revives PlayPlaces, which had been phased out, and adds open kitchen layouts where customers can watch McCafe drinks being prepared.

The tech piece is "ArchIQ," an AI-powered operating system. Its ordering assistant "Archy" takes orders in English and Spanish and saves about 50 labor hours per week, while other components manage inventory, schedule shifts and use scales to assess order accuracy.

"Capabilities such as AI-enabled revenue management and Archy's suggestive sell will help increased average check over time," CFO Ian Borden said.

The cost falls heavily on franchisees. A standard lobby remodel of a U.S. drive-thru restaurant runs $400,000 to $450,000, paid by the franchisee. The incremental NEXT investments will add roughly $800,000 per restaurant, though McDonald's will subsidize some of it through rent relief and direct capital. About $5 billion of the support will flow through 2030, and the company projects $1.5 billion to $2 billion in capital spending from 2027 through 2030 on top of roughly $3 billion in typical annual capex. McDonald's reported $3.4 billion in capital expenditures in 2025.

Franchisee pushback is likely. Beef and labor costs are already squeezing their profits.

"We'll get good returns," Kempczinski told CNBC. "Now that doesn't mean to say that there aren't going to be a lot of anxieties, a lot of questions, as there always is around investment. It happens every time we go into one of these cycles, and we'll work with our franchisees collaboratively on that to address their questions."

Kempczinski projects franchisee returns in the mid-to-high 20% range, with corporate returns in the high teens. Efficiency improvements should add roughly $100,000 in annual cash flow for the average U.S. restaurant, paying back franchisee investment in about four years. Average annual U.S. franchisee cash flow now stands at about $500,000, up nearly 50% versus 2019, according to Borden.

On the cost side, McDonald's targets an operating margin in the low-to-mid 50% range by 2030, up from 46.1% in 2025, and wants G&A spending down to about 1.9% of systemwide sales by 2030, versus a forecast 2.2% in 2026.

"At the company, AI will help enable a step-change improvement in corporate G&A," Borden said.

Revenue growth is part of the margin math. McDonald's is building a media network that sells advertising on its digital drive-thru displays to other businesses — a business executives said could reach $1 billion, following the high-margin playbook of Amazon and Walmart. Testing began over the last month at 450 company-owned restaurants.

The menu strategy leans hard into chicken and beverages, where McDonald's wants 1.5 percentage points of global share gains in each by 2030. The chain already generates nearly $15 billion in system sales from Chicken McNuggets, $4 billion from McChicken and $2.5 billion from McCrispy, holding about 20% of the $130 billion global chicken category, according to global chief restaurant experience officer Jill McDonald.

U.S. restaurants will soon pilot hand-breaded chicken, a technique Chick-fil-A, Popeyes and Raising Cane's already use, alongside new grilled sandwiches, wraps and McNugget flavors. In beverages — where McDonald's holds roughly 10% of the $230 billion global category — it plans international expansion of its U.S. drink lineup, new espresso machines and alternative milks.

"Beverages are no longer just an add-on, but a reason to visit," McDonald said.

Executives also addressed GLP-1 anxiety that has weighed on the stock for years. U.S. President Skye Anderson said 84% of households with at least one GLP-1 user still visit McDonald's. "This is an opportunity," she said. "We don't need to win a new base of customers into McDonald's. Instead, we need to keep giving them more reasons to make McDonald's their first choice as their eating habits evolve."

McDonald's is not abandoning beef, where it holds about 40% of the $50 billion worldwide category. It plans to expand fresh beef Quarter Pounders beyond the U.S. and launch "Make It Golden," a multiyear training program for staff and franchisees, rolling out Oct. 5 — the 124th birthday of Ray Kroc.

"While there's so much our customers love, we are falling short when it comes to consistent execution," Anderson said.

The 6% share drop signals that investors want proof the returns materialize before funding the ambition. The first test arrives Oct. 5, when the training program launches and franchisees begin weighing an $800,000 decision.