10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 31, 2023

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from             to

    

Commission File Number 1-5231

McDONALD’S CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware		36-2361282
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
110 North Carpenter Street		60607
Chicago,	Illinois
(Address of Principal Executive Offices)		(Zip Code)

(630) 623-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MCD	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒

730,093,896

(Number of shares of common stock

outstanding as of March 31, 2023)

McDONALD’S CORPORATION

___________________________

INDEX

_______

	Page Reference
Part I. Financial Information
Item 1 – Financial Statements
Condensed Consolidated Balance Sheet, March 31, 2023 (unaudited) and December 31, 2022	3
Condensed Consolidated Statement of Income (unaudited), quarters ended March 31, 2023 and 2022	4
Condensed Consolidated Statement of Comprehensive Income (unaudited), quarters ended March 31, 2023 and 2022	5
Condensed Consolidated Statement of Cash Flows (unaudited), quarters ended March 31, 2023 and 2022	6
Condensed Consolidated Statement of Shareholders' Equity (unaudited), quarters ended March 31, 2023 and 2022	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	34
Item 4 – Controls and Procedures	34
Part II. Other Information
Item 1 – Legal Proceedings	36
Item 1A – Risk Factors	36
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6 – Exhibits	37
Signature	39

All trademarks used herein are the property of their respective owners and are used with permission.

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET
	(unaudited)
In millions, except per share data	March 31, 2023		December 31, 2022
Assets
Current assets
Cash and equivalents	$	3,708.1	$	2,583.8
Accounts and notes receivable	2,075.5		2,115.0
Inventories, at cost, not in excess of market	51.5		52.0
Prepaid expenses and other current assets	963.6		673.4
Total current assets	6,798.7		5,424.2
Other assets
Investments in and advances to affiliates	1,087.6		1,064.5
Goodwill	2,930.6		2,900.4
Miscellaneous	4,794.8		4,707.2
Total other assets	8,813.0		8,672.1
Lease right-of-use asset, net	12,544.2		12,565.7
Property and equipment
Property and equipment, at cost	41,487.1		41,037.6
Accumulated depreciation and amortization	(17,628.6)		(17,264.0)
Net property and equipment	23,858.5		23,773.6
Total assets	$	52,014.4	$	50,435.6
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings and current maturities of long-term debt	$	524.2	$	—
Accounts payable	811.8		980.2
Lease liability	668.7		661.1
Income taxes	795.8		274.9
Other taxes	273.0		255.1
Accrued interest	364.6		393.4
Accrued payroll and other liabilities	1,186.6		1,237.4
Total current liabilities	4,624.7		3,802.1
Long-term debt	36,603.7		35,903.5
Long-term lease liability	12,122.6		12,134.4
Long-term income taxes	737.1		791.9
Deferred revenues - initial franchise fees	760.5		757.8
Other long-term liabilities	1,059.4		1,051.8
Deferred income taxes	1,882.5		1,997.5
Shareholders’ equity (deficit)
Preferred stock, no par value; authorized – 165.0 million shares; issued – none	—		—
Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares	16.6		16.6
Additional paid-in capital	8,635.5		8,547.1
Retained earnings	60,235.0		59,543.9
Accumulated other comprehensive income (loss)	(2,489.4)		(2,486.6)
Common stock in treasury, at cost; 930.5 and 929.3 million shares	(72,173.8)		(71,624.4)
Total shareholders’ equity (deficit)	(5,776.1)		(6,003.4)
Total liabilities and shareholders’ equity (deficit)	$	52,014.4	$	50,435.6

See Notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
	Quarters Ended
	March 31,
In millions, except per share data	2023		2022
Revenues
Sales by Company-operated restaurants	$	2,224.3	$	2,302.4
Revenues from franchised restaurants	3,587.5		3,262.8
Other revenues	86.0		100.4
Total revenues	5,897.8		5,665.6
Operating costs and expenses
Company-operated restaurant expenses	1,923.1		1,959.2
Franchised restaurants-occupancy expenses	598.3		584.0
Other restaurant expenses	62.8		72.3
Selling, general & administrative expenses
Depreciation and amortization	99.3		92.7
Other	553.3		584.3
Other operating (income) expense, net	128.6		60.5
Total operating costs and expenses	3,365.4		3,353.0
Operating income	2,532.4		2,312.6
Interest expense	329.7		287.3
Nonoperating (income) expense, net	(64.3)		484.1
Income before provision for income taxes	2,267.0		1,541.2
Provision for income taxes	464.7		436.8
Net income	$	1,802.3	$	1,104.4
Earnings per common share-basic	$	2.47	$	1.49
Earnings per common share-diluted	$	2.45	$	1.48
Dividends declared per common share	$	1.52	$	1.38
Weighted-average shares outstanding-basic	730.9		742.6
Weighted-average shares outstanding-diluted	735.5		747.6

See Notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
	Quarters Ended
	March 31,
In millions	2023		2022
Net income	$	1,802.3	$	1,104.4
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments:
Gain (loss) recognized in accumulated other comprehensive income ("AOCI"), including net investment hedges	15.0		(84.2)
Reclassification of (gain) loss to net income	—		—
Foreign currency translation adjustments-net of tax benefit (expense) of $35.6 and $(59.0)	15.0		(84.2)
Cash flow hedges:
Gain (loss) recognized in AOCI	(8.5)		27.4
Reclassification of (gain) loss to net income	(8.2)		(10.1)
Cash flow hedges-net of tax benefit (expense) of $4.5 and $(5.0)	(16.7)		17.3
Defined benefit pension plans:
Gain (loss) recognized in AOCI	8.4		0.1
Reclassification of (gain) loss to net income	(9.5)		(1.4)
Defined benefit pension plans-net of tax benefit (expense) of $1.1 and $0.0	(1.1)		(1.3)
Total other comprehensive income (loss), net of tax	(2.8)		(68.2)
Comprehensive income	$	1,799.5	$	1,036.2

See Notes to condensed consolidated financial statements.

5

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
	Quarters Ended
	March 31,
In millions	2023		2022
Operating activities
Net income	$	1,802.3	$	1,104.4
Adjustments to reconcile to cash provided by operations
Charges and credits:
Depreciation and amortization	490.5		479.7
Deferred income taxes	(86.1)		(50.5)
Share-based compensation	49.7		54.3
Other	(30.8)		72.0
Changes in working capital items	195.1		473.4
Cash provided by operations	2,420.7		2,133.3
Investing activities
Capital expenditures	(503.3)		(401.2)
Purchases of restaurant businesses	(97.6)		(86.7)
Sales of restaurant businesses	20.8		16.5
Sales of property	18.0		4.9
Other	(179.2)		(88.0)
Cash used for investing activities	(741.3)		(554.5)
Financing activities
Net short-term borrowings	12.8		6.0
Long-term financing issuances	1,054.3		—
Long-term financing repayments	—		(1,350.6)
Treasury stock purchases	(578.4)		(1,506.5)
Common stock dividends	(1,111.2)		(1,025.1)
Proceeds from stock option exercises	73.8		58.7
Other	(9.7)		(12.6)
Cash used for financing activities	(558.4)		(3,830.1)
Effect of exchange rates on cash and cash equivalents	3.3		(122.2)
Cash and equivalents increase (decrease)	1,124.3		(2,373.5)
Cash and equivalents at beginning of period	2,583.8		4,709.2
Cash and equivalents at end of period	$	3,708.1	$	2,335.7

See Notes to condensed consolidated financial statements.

6

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the quarter ended March 31, 2022
	Common stock issued										Accumulated other comprehensive income (loss)								Common stock in treasury			Total shareholders’ equity (deficit)
					Additional paid-in capital			Retained earnings		Pensions			Cash flow hedges			Foreign currency translation
In millions, except per share data	Shares	Amount																	Shares	Amount
Balance at December 31, 2021	1,660.6		$	16.6		$	8,231.6	$	57,534.7		$	(179.5)		$	(24.8)		$	(2,369.4)	(915.8)	$	(67,810.2)		$	(4,601.0)
Net income								1,104.4															1,104.4
Other comprehensive income (loss),     net of tax											(1.3)			17.3			(84.2)						(68.2)
Comprehensive income																							1,036.2
Common stock cash dividends     ($1.38 per share)								(1,025.1)															(1,025.1)
Treasury stock purchases																			(6.1)	(1,506.5)			(1,506.5)
Share-based compensation						54.3																	54.3
Stock option exercises and other						21.2													0.8	30.1			51.3
Balance at March 31, 2022	1,660.6		$	16.6		$	8,307.1	$	57,614.0		$	(180.8)		$	(7.5)		$	(2,453.6)	(921.1)	$	(69,286.6)		$	(5,990.8)

For the quarter ended March 31, 2023
	Common stock issued										Accumulated other comprehensive income (loss)								Common stock in treasury			Total shareholders’ equity (deficit)
					Additional paid-in capital			Retained earnings		Pensions			Cash flow hedges			Foreign currency translation
In millions, except per share data	Shares	Amount																	Shares	Amount
Balance at December 31, 2022	1,660.6		$	16.6		$	8,547.1	$	59,543.9		$	(298.2)		$	30.7		$	(2,219.1)	(929.3)	$	(71,624.4)		$	(6,003.4)
Net income								1,802.3															1,802.3
Other comprehensive income (loss),     net of tax											(1.1)			(16.7)			15.0						(2.8)
Comprehensive income																							1,799.5
Common stock cash dividends     ($1.52 per share)								(1,111.2)															(1,111.2)
Treasury stock purchases																			(2.2)	(584.5)			(584.5)
Share-based compensation						49.7																	49.7
Stock option exercises and other						38.7													1.0	35.1			73.8
Balance at March 31, 2023	1,660.6		$	16.6		$	8,635.5	$	60,235.0		$	(299.3)		$	14.0		$	(2,204.1)	(930.5)	$	(72,173.8)		$	(5,776.1)

See Notes to condensed consolidated financial statements.

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers, are referred to herein as the "System."

Basis of Presentation

The accompanying condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2022 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter ended March 31, 2023 do not necessarily indicate the results that may be expected for the full year.

Restaurant Information

The following table presents restaurant information by ownership type:

Restaurants at March 31,	2023	2022
Conventional franchised	21,701	21,558
Developmental licensed	8,289	7,981
Foreign affiliated	8,427	8,013
Total Franchised	38,417	37,552
Company-operated	2,118	2,792
Total Systemwide restaurants	40,535	40,344

Restaurant information reflects the sale of over 850 restaurants in conjunction with the exit of our business in Russia in the second quarter of 2022, most of which were Company-operated.

The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the accompanying condensed consolidated financial statements for the periods prior to purchase and sale.

Per Common Share Information

Diluted earnings per common share is calculated as net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 4.6 million shares and 5.0 million shares for the quarters 2023 and 2022, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 2.3 million shares and 1.7 million shares for the quarters 2023 and 2022, respectively.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023 that are of significance or potential significance to the Company.

8

Accelerating the Organization

In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy include the addition of Restaurant Development to the Company’s growth pillars and an internal effort to modernize ways of working, Accelerating the Organization, both of which are aimed at elevating the Company’s performance. Accelerating the Organization is designed to unlock further growth as the Company modernizes the way it works by focusing on becoming faster, more innovative and more efficient at solving problems for its customers and people.

The Company expects to incur between $200 million and $250 million of expenses related to this strategic initiative in 2023, of which $180 million was incurred in the three months ended March 31, 2023. These expenses were recorded in the Other operating (income) expense, net line within the consolidated statement of income. Restructuring expenses primarily consist of employee termination benefits, costs to terminate contracts, including lease terminations, and professional services and other costs. Professional services and other costs primarily relate to expenses incurred for legal and consulting activities. There were no significant non-cash impairment charges included in the amounts listed in the table below.

The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions):

	Employee Termination Benefits		Costs to Terminate Contracts		Other Related Costs		Total
2023
Beginning Balance	$	—	$	—	$	—	$	—
Restructuring Costs Incurred	110.3		26.9		43.3		180.5
Cash Payments	(1.5)		(1.4)		(0.3)		(3.2)
Other Non-Cash Items	—		—		(14.1)		(14.1)
Accrued Balance at End of Period	$	108.8	$	25.5	$	28.9	$	163.2

Of the $180 million of restructuring costs incurred in the three months ended March 31, 2023, $58 million was recorded in the U.S., $71 million was recorded in the International Operated Markets segment and $51 million was recorded in the International Developmental Licensed Markets & Corporate segment, the majority of which was recorded at Corporate.

Substantially all of the accrued restructuring balance recorded at March 31, 2023, related to the Company’s Accelerating the Organization initiative, is expected to be paid out by the end of 2023.

As part of Accelerating the Organization, the Company is also in the initial stages of developing a strategy that will utilize an enterprise-wide Global Business Services model to deliver business services at scale with greater efficiency. Additional costs will be incurred as the strategy progresses; however, at this point in time these future costs cannot be estimated. The expectation is that the Company will complete the majority of its Global Business Services strategy by the end of 2027.

Income Taxes

The effective income tax rate was 20.5% and 28.3% for the quarters ended March 31, 2023 and 2022, respectively. The tax rate for the quarter ended March 31, 2022 was impacted by the non-deductibility for tax purposes of $500 million of nonoperating expense related to a tax audit in France. Excluding the impacts of the $500 million of nonoperating expense, current year restructuring charges related to Accelerating the Organization and prior year charges, primarily related to Russia, the effective income tax rate was 20.9% and 21.3% for the quarters ended March 31, 2023 and 2022, respectively.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs. There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2022 Annual Report on Form 10-K.

At March 31, 2023, the fair value of the Company’s debt obligations was estimated at $35.6 billion, compared to a carrying amount of $37.1 billion. The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value.

9

Financial Instruments and Hedging Activities

The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes.

The following table presents the fair values of derivative instruments included on the condensed consolidated balance sheet:

	Derivative Assets					Derivative Liabilities
In millions	Balance Sheet Classification	March 31, 2023		December 31, 2022		Balance Sheet Classification	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Foreign currency	Prepaid expenses and other current assets	$	39.9	$	53.3	Accrued payroll and other liabilities	$	(23.0)	$	(17.9)
Interest rate	Prepaid expenses and other current assets	—		—		Accrued payroll and other liabilities	(1.5)		—
Foreign currency	Miscellaneous other assets	32.3		28.7		Other long-term liabilities	(27.6)		(30.7)
Interest rate	Miscellaneous other assets	—		—		Other long-term liabilities	(79.0)		(91.5)
Total derivatives designated as hedging instruments		$	72.2	$	82.0		$	(131.1)	$	(140.1)
Derivatives not designated as hedging instruments
Equity	Prepaid expenses and other current assets	$	219.3	$	200.5	Accrued payroll and other liabilities	$	(0.1)	$	(1.6)
Foreign currency	Prepaid expenses and other current assets	0.6		—		Accrued payroll and other liabilities	—		—
Equity	Miscellaneous other assets	—		—
Total derivatives not designated as hedging instruments		$	219.9	$	200.5		$	(0.1)	$	(1.6)
Total derivatives		$	292.1	$	282.5		$	(131.2)	$	(141.7)

    The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2023 and 2022, respectively:

	Location of gain or loss recognized in income on derivative	Gain (loss) recognized in AOCI				Gain (loss) reclassified into income from AOCI				Gain (loss) recognized in income on derivative
In millions		2023		2022		2023		2022		2023		2022
Foreign currency	Nonoperating income/expense	$	(9.2)	$	13.5	$	10.3	$	14.1
Interest rate	Interest expense	(1.5)		21.8		0.1		(1.1)
Cash flow hedges		$	(10.7)	$	35.3	$	10.4	$	13.0
Foreign currency denominated debt	Nonoperating income/expense	$	(162.9)	$	259.0			$	—
Foreign currency derivatives	Nonoperating income/expense	7.6		4.4
Foreign currency derivatives(1)	Interest expense									$	5.7	$	2.3
Net investment hedges		$	(155.3)	$	263.4			$	—	$	5.7	$	2.3
Foreign currency	Nonoperating income/expense									$	2.1	$	(4.5)
Equity	Selling, general & administrative expenses									$	15.6	$	(21.5)
Undesignated derivatives										$	17.7	$	(26.0)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

10

Fair Value Hedges

The Company enters into fair value hedges to reduce the exposure to changes in fair values of certain liabilities. The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by the use of interest rate swaps. At March 31, 2023, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $1.2 billion, which included a decrease of $79 million of cumulative hedging adjustments. For the three months ended March 31, 2023, the Company recognized a $12.5 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense.

Cash Flow Hedges

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of March 31, 2023, the Company had foreign currency derivatives outstanding with an equivalent notional amount of $1.6 billion that hedged a portion of forecasted foreign currency denominated cash flows.

To protect against the variability of interest rates on anticipated bond issuances, the Company may use treasury locks to hedge a portion of expected future cash flows. As of March 31, 2023, the Company had derivatives outstanding with a notional amount of $500 million that hedge a portion of forecasted cash flows.

Based on market conditions at March 31, 2023, the $14 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months.

Net Investment Hedges

The Company uses foreign currency denominated debt (third-party and intercompany) and foreign currency derivatives to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI. As of March 31, 2023, $13.9 billion of the Company's third-party foreign currency denominated debt, $1.0 billion of the Company's intercompany foreign currency denominated debt and $662 million of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

Undesignated Derivatives

The Company enters into certain derivatives that are not designated for hedge accounting. Therefore, the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. Changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, together with the currency gain or loss from the hedged balance sheet position.

Credit Risk

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at March 31, 2023 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At March 31, 2023, the Company was required to post $120 million of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.

11

Franchise Arrangements

Revenues from franchised restaurants consisted of:

	Quarters Ended
	March 31,
In millions	2023		2022
Rents	$	2,269.8	$	2,081.1
Royalties	1,303.0		1,168.7
Initial fees	14.7		13.0
Revenues from franchised restaurants	$	3,587.5	$	3,262.8

Segment Information

The Company operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance:

•U.S. - the Company's largest market. The segment is 95% franchised as of March 31, 2023.

•International Operated Markets - comprised of markets or countries in which the Company operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the U.K. The segment is 89% franchised as of March 31, 2023. During the second quarter of 2022, the Company completed the sale of its business in Russia, resulting in a total exit from the market.

•International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System. Corporate activities are also reported in this segment. The segment is 98% franchised as of March 31, 2023.

The following table presents the Company’s revenues and operating income by segment:

	Quarters Ended
	March 31,
In millions	2023		2022
Revenues
U.S.	$	2,487.6	$	2,175.6
International Operated Markets	2,794.8		2,922.1
International Developmental Licensed Markets & Corporate	615.4		567.9
Total revenues	$	5,897.8	$	5,665.6
Operating Income
U.S.	$	1,295.1	$	1,151.0
International Operated Markets	1,192.7		1,129.2
International Developmental Licensed Markets & Corporate	44.6		32.4
Total operating income	$	2,532.4	$	2,312.6

Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. There were no subsequent events that required recognition or disclosure.

12

Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company franchises and operates McDonald’s restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries. Of the 40,535 McDonald's restaurants at March 31, 2023, 95% were franchised.

The Company’s reporting segments are aligned with its strategic priorities and reflect how management reviews and evaluates operating performance. Significant reportable segments include the United States ("U.S.") and International Operated Markets. In addition, there is the International Developmental Licensed Markets & Corporate segment, which includes the results of over 75 countries, as well as Corporate activities.

McDonald’s franchised restaurants are owned and operated under one of the following structures - conventional franchise, developmental license or affiliate. The optimal ownership structure for an individual restaurant, trading area or market (country) is based on a variety of factors, including the availability of individuals with entrepreneurial experience and financial resources, as well as the local legal and regulatory environment in critical areas such as property ownership and franchising. The business relationship between the Company and its independent franchisees is supported by adhering to standards and policies, including McDonald's Global Brand Standards, and is of fundamental importance to overall performance and to protecting the McDonald’s brand.

The Company is primarily a franchisor and believes franchising is paramount to delivering great-tasting food, locally relevant customer experiences and driving profitability. Franchising enables an individual to be their own employer and maintain control over all employment related matters, marketing and pricing decisions, while also benefiting from the strength of McDonald’s global brand, operating system and financial resources.

Directly operating McDonald’s restaurants contributes significantly to the Company's ability to act as a credible franchisor. One of the strengths of the franchising model is that the expertise from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, the Company is able to further develop and refine operating standards, marketing concepts and product and pricing strategies that will ultimately benefit McDonald’s restaurants.

The Company’s revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.

Conventional Franchise

Under a conventional franchise arrangement, the Company generally owns or secures a long-term lease on the land and building for the restaurant location and the franchisee pays for equipment, signs, seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables it to achieve restaurant performance levels that are among the highest in the industry.

Franchisees are responsible for reinvesting capital in their businesses over time. In addition, to accelerate implementation of certain initiatives, the Company may co-invest with franchisees to fund improvements to their restaurants or operating systems. These investments, developed in collaboration with franchisees, are designed to cater to consumer preferences, improve local business performance and increase the value of the McDonald's brand through the development of modernized, more attractive and higher revenue generating restaurants.

The Company requires franchisees to meet rigorous standards and generally does not work with passive investors. The business relationship with franchisees is designed to facilitate consistency and high quality at all McDonald’s restaurants. Conventional franchisees contribute to the Company’s revenue, primarily through the payment of rent and royalties based upon a percent of sales, with specified minimum rent payments, along with initial fees paid upon the opening of a new restaurant or grant of a new franchise. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.

Developmental License or Affiliate

Under a developmental license or affiliate arrangement, licensees are responsible for operating and managing their businesses, providing capital (including the real estate interest) and developing and opening new restaurants. The Company generally does not invest any capital under a developmental license or affiliate arrangement, and it receives a royalty based on a percent of sales, and generally receives initial fees upon the opening of a new restaurant or grant of a new license.

13

While developmental license and affiliate arrangements are largely the same, affiliate arrangements are used in a limited number of foreign markets (primarily China and Japan) within the International Developmental Licensed Markets segment as well as a limited number of individual restaurants within the International Operated Markets segment, where the Company also has an equity investment and records its share of net results in equity in earnings of unconsolidated affiliates.

Strategic Direction

The Company’s growth strategy, Accelerating the Arches (the “Strategy”), encompasses all aspects of McDonald’s business as the leading global omni-channel restaurant brand. The Strategy reflects the Company’s purpose, mission and values, as well as growth pillars that build on the Company’s competitive advantages.

Purpose, Mission and Values

The following purpose, mission and values underpin the Company’s success and are at the heart of the Strategy.

Through its size and scale, the Company embraces and prioritizes its role and commitment to the communities in which it operates through its purpose to feed and foster communities, and its mission to create delicious feel-good moments for everyone. The Company is guided by five core values that define who it is and how it runs its business across the three-legged stool of franchisees, suppliers and employees:

1.Serve - We put our customers and people first;

2.Inclusion - We open our doors to everyone;

3.Integrity - We do the right thing;

4.Community - We are good neighbors; and

5.Family - We get better together.

The Company believes that its people, all around the world, set it apart and bring these values to life on a daily basis.

Growth Pillars

The following growth pillars, M-C-D, build on the Company’s historic strengths and articulate areas of further opportunity. Under the Strategy, the Company will:

•Maximize our Marketing by investing in new, culturally relevant approaches, grounded in fan truths, to effectively communicate the story of the Company’s brand, food and purpose. This is exemplified by campaigns that elevate the entire brand and continue to be repeated and scaled around the globe, such as the Famous Orders platform and the Raise Your Arches campaign. The Company is committed to a marketing strategy that highlights value at every tier of the menu, as affordability remains a cornerstone of the McDonald’s brand and is especially important to customers in uncertain economic environments.

•Commit to the Core menu by tapping into customer demand for the familiar and focusing on serving the Company’s iconic products, such as its World Famous Fries, the Big Mac, Chicken McNuggets and the McFlurry. Globally, the Company possesses over 10 of these "billion-dollar brand equities." The Company continues to improve on its classics, including by implementing a series of operational and formulation changes designed to deliver hotter, juicer, tastier burgers across the globe. While leaning into core icons like Chicken McNuggets, the Company will continue to focus on scaling emerging equities such as the McSpicy and McCrispy Chicken Sandwiches. This is exemplified by the U.S. leveraging learnings from the U.K., Canada and Germany to relaunch its Crispy Chicken Sandwich under the McCrispy global equity umbrella. The Company also continues to see a significant opportunity with coffee, demonstrated by markets leveraging the McCafé brand, customer experience, value and quality to drive long-term growth.

•Double Down on the 4D's: Digital, Delivery, Drive Thru and, the recently added, Restaurant Development by leveraging the Company’s competitive strengths and building a powerful digital experience growth engine to deliver a personalized and convenient customer experience. To unlock further growth, the Company expects to continue to accelerate the pace of restaurant openings and technology innovation so that whenever and however customers choose to interact with McDonald’s, they can enjoy a fast, easy experience that meets their needs. In the first quarter of 2023, digital channels (the mobile app, delivery and kiosk) comprised almost 40% of Systemwide sales in the Company’s top six markets. This represented over $7.5 billion in digital Systemwide sales and growth of over $2.0 billion, or 30%, compared to the prior year.

◦Digital: The Company’s digital experience growth engine — “MyMcDonald’s” — is transforming its offerings across drive thru, takeaway, delivery, curbside pick-up and dine-in. Through the digital tools, customers can access personalized offers, participate in a loyalty program, order through the mobile app and receive McDonald's food through the channel of their choice. A recent digital enhancement piloting in the U.S. enables crew to begin assembling a customer’s mobile order prior to their arrival at the restaurant to expedite service and elevate customer satisfaction.

14

Additionally, the Company has successful loyalty programs in 50 markets around the world, including all of its top six markets. The Company’s loyalty customers have proven to be highly engaged, with nearly 50 million active loyalty members across the Company’s top six markets during the first quarter of 2023, including over 28 million in the U.S.

◦Delivery: Delivery is now offered in over 35,000 restaurants across about 100 markets, representing over 85% of McDonald’s restaurants. The Company is continuing to build on and enhance the delivery experience for customers, including by adding the ability to place a delivery order on the McDonald's mobile app (a feature that is now available in some of the Company’s largest markets, including the U.S., the U.K., Canada and Australia). The Company has also put in place long-term strategic partnerships with delivery providers such as UberEats, DoorDash, Just Eat Takeaway.com and Deliveroo. These partnerships are expected to benefit the Company, customers and franchisees by optimizing operational efficiencies and creating a seamless customer experience.

◦Drive Thru: The Company has drive thru locations in over 26,000 restaurants globally, including nearly 95% of the approximately 13,500 locations in the U.S. This channel remains a competitive advantage, and the Company expects that it will become even more critical to meeting customers’ demand for flexibility and choice. The Company continues to build on its drive thru advantage, as the vast majority of new restaurant openings in the U.S. and International Operated Markets will include a drive thru.

◦Restaurant Development: The Company expects to continue to accelerate the pace of restaurant openings, with plans to open approximately 1,900 new restaurants across the globe in 2023, which will contribute to nearly 4% unit growth (net of closures). The Company believes there is opportunity for further growth in many of its largest markets and to explore new formats under the McDonald’s brand over the coming years.

Foundation

Foundational to the Strategy is keeping the customer and restaurant crew at the center of everything the Company does, along with a relentless focus on running great restaurants, empowering its people and modernizing ways of working through Accelerating the Organization.

These efforts, coupled with investments in innovation, are designed to enhance the customer experience and deliver long-term profitable growth for all stakeholders. The Strategy is aligned with the Company’s capital allocation philosophy of investing in opportunities to grow the business (through new restaurants and reinvesting in existing restaurants) and returning free cash flow to shareholders over time through dividends and share repurchases.

The Company believes the Strategy builds on its inherent strengths by harnessing its competitive advantages while leveraging its size, scale and agility to adapt and adjust to uncertain economic and operating environments to meet customer demands. The Strategy is supported by a strong global senior leadership team aimed at executing against the MCD growth pillars and accelerating the Company’s broad-based business momentum.

15

First Quarter 2023 Financial Performance

Global comparable sales increased 12.6% for the quarter, reflecting strong comparable sales of 12.6% across each segment.

•U.S. comparable sales results benefited from strategic menu price increases and positive comparable guest count growth. Successful operational execution in McDonald’s restaurants, effective marketing campaigns featuring the core menu and continued digital and delivery growth contributed to strong comparable sales results.

•International Operated Markets segment results reflected strong comparable sales across the Big Five* and the majority of other markets.

•International Developmental Licensed Markets segment results reflected strong comparable sales led by Japan, along with all geographic regions.

In addition to the comparable sales results, the Company had the following financial results for the quarter:

•Consolidated revenues increased 4% (8% in constant currencies).

•Systemwide sales increased 9% (13% in constant currencies).

•Consolidated operating income increased 10% (14% in constant currencies).

•Diluted earnings per share was $2.45, an increase of 66% (72% in constant currencies). Excluding $0.18 per share of current year restructuring charges related to Accelerating the Organization, diluted earnings per share was $2.63, an increase of 15% (19% in constant currencies) when also excluding prior year charges detailed in the Net Income and Diluted Earnings Per Share section on page 19 of this report.

Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.    

*Australia, Canada, France, Germany and the U.K. are collectively referred to as the "Big Five" international markets.

16

The Following Definitions Apply to these Terms as Used Throughout this Report:

•Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.

•Comparable sales and comparable guest counts are compared to the same period in the prior year and represent sales and transactions, respectively, at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, natural disasters and acts of war, terrorism or other hostilities (including restaurants temporarily closed due to COVID-19, as well as those that remain closed in Ukraine). Restaurants in Russia were treated as permanently closed as of April 1, 2022 and therefore excluded from the calculation of comparable sales and comparable guest counts beginning in the second quarter of 2022. Comparable sales exclude the impact of currency translation and the sales of any market considered hyperinflationary (generally identified as those markets whose cumulative inflation rate over a three-year period exceeds 100%), which management believes more accurately reflects the underlying business trends. Beginning in the first quarter of 2023, McDonald's excluded results from Argentina and Lebanon in the calculation of comparable sales due to hyperinflation (Venezuela continues to be excluded). Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.

•Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. This includes sales from digital channels, which are comprised of the mobile app, delivery and kiosk at both Company-operated and franchised restaurants. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The Company's revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Changes in Systemwide sales are primarily driven by comparable sales and net restaurant unit expansion.

•Free cash flow, defined as cash provided by operations less capital expenditures, and free cash flow conversion rate, defined as free cash flow divided by net income, are measures reviewed by management in order to evaluate the Company’s ability to convert net profits into cash resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value.

17

CONSOLIDATED OPERATING RESULTS
	Quarter Ended
Dollars in millions, except per share data	March 31, 2023
	Amount			Increase/ (Decrease)
Revenues
Sales by Company-operated restaurants		$	2,224.3	(3)	%
Revenues from franchised restaurants		3,587.5		10
Other revenues		86.0		(14)
Total revenues		5,897.8		4
Operating costs and expenses
Company-operated restaurant expenses		1,923.1		(2)
Franchised restaurants-occupancy expenses		598.3		2
Other restaurant expenses		62.8		(13)
Selling, general & administrative expenses
Depreciation and amortization		99.3		7
Other		553.3		(5)
Other operating (income) expense, net		128.6		n/m
Total operating costs and expenses		3,365.4		—
Operating income		2,532.4		10
Interest expense		329.7		15
Nonoperating (income) expense, net		(64.3)		n/m
Income before provision for income taxes		2,267.0		47
Provision for income taxes		464.7		6
Net income		$	1,802.3	63	%
Earnings per common share-basic		$	2.47	65	%
Earnings per common share-diluted		$	2.45	66	%

n/m Not meaningful

18

Impact of Foreign Currency Translation

The impact of foreign currency translation on consolidated operating results for the quarter continued to reflect the weakening of all major currencies against the U.S. Dollar, including the Euro, British Pound and Australian Dollar.

While changes in foreign currency exchange rates affect reported results, McDonald's mitigates exposures, where practical, by purchasing goods and services in local currencies, financing in local currencies and hedging certain foreign-denominated cash flows. Results excluding the effect of foreign currency translation (referred to as constant currency) are calculated by translating current year results at prior year average exchange rates.

IMPACT OF FOREIGN CURRENCY TRANSLATION
Dollars in millions, except per share data
					Currency Translation Benefit/ (Cost)
Quarters Ended March 31,	2023		2022			2023
Revenues	$	5,897.8	$	5,665.6		$	(215.0)
Company-operated margins	301.2		343.2			(11.8)
Franchised margins	2,989.3		2,678.8			(94.7)
Selling, general & administrative expenses	652.6		677.0			9.0
Operating income	2,532.4		2,312.6			(99.0)
Net income	1,802.3		1,104.4			(65.5)
Earnings per share-diluted	$	2.45	$	1.48		$	(0.09)

Net Income and Diluted Earnings per Share

Net income increased 63% (69% in constant currencies) to $1,802.3 million, and diluted earnings per share increased 66% (72% constant currencies) to $2.45. Foreign currency translation had a negative impact of $0.09 on diluted earnings per share.

Results for 2023 included the following:

•Pre-tax restructuring charges of $180 million, or $0.18 per share, related to Accelerating the Organization

Results for 2022 included the following:

•Pre-tax expenses of $127 million, or $0.13 per share, primarily related to Russia

•$500 million, or $0.67 per share, of nonoperating expense related to the settlement of a tax audit in France

Excluding the above items, results reflected strong operating performance driven primarily by higher sales-driven Franchised margins.

During the quarter, the Company repurchased 2.2 million shares of stock for $584.5 million. Additionally, the Company paid a quarterly dividend of $1.52 per share, or $1.1 billion.

NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION

Dollars in millions, except per share data

	Quarters Ended March 31,
	Net Income								Earnings per share - diluted
	2023		2022		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation		2023		2022		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
GAAP	$	1,802.3	$	1,104.4	63	%	69	%	$	2.45	$	1.48	66	%	72	%
(Gains)/charges	134.4		102.1						0.18		0.13
Tax settlement	—		500.0						—		0.67
Non-GAAP	$	1,936.7	$	1,706.5	13	%	17	%	$	2.63	$	2.28	15	%	19	%

19

Revenues

The Company's revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees, developmental licensees and affiliates. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimum rent payments, and initial fees. Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales, and generally include initial fees. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.

Franchised restaurants represented 95% of McDonald's restaurants worldwide at March 31, 2023. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.

REVENUES
Dollars in millions
Quarters Ended March 31,	2023		2022		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
Company-operated sales
U.S.	$	761.3	$	639.0	19	%	19	%
International Operated Markets	1,270.4		1,480.7		(14)		(8)
International Developmental Licensed Markets & Corporate	192.6		182.7		5		11
Total	$	2,224.3	$	2,302.4	(3)	%	1	%
Franchised revenues
U.S.	$	1,678.5	$	1,493.5	12	%	12	%
International Operated Markets	1,486.2		1,403.3		6		12
International Developmental Licensed Markets & Corporate	422.8		366.0		16		22
Total	$	3,587.5	$	3,262.8	10	%	13	%
Total Company-operated sales and Franchised revenues
U.S.	$	2,439.8	$	2,132.5	14	%	14	%
International Operated Markets	2,756.6		2,884.0		(4)		2
International Developmental Licensed Markets & Corporate	615.4		548.7		12		19
Total	$	5,811.8	$	5,565.2	4	%	8	%
Total Other revenues	$	86.0	$	100.4	(14)	%	(12)	%
Total Revenues	$	5,897.8	$	5,665.6	4	%	8	%

•Total Company-operated sales and franchised revenues increased 4% (8% in constant currencies), benefiting from strong sales performance across all segments. Revenue growth in the International Operated Markets segment in constant currencies was partly offset by the impact of the Company's exit from Russia in the second quarter of 2022.

20

Comparable Sales

The following table presents the percent change in comparable sales for the quarters ended March 31, 2023 and 2022:

	Increase/(Decrease)
	Quarters Ended March 31,
	2023		2022
U.S.	12.6	%	3.5	%
International Operated Markets	12.6		20.4
International Developmental Licensed Markets & Corporate	12.6		14.7
Total	12.6	%	11.8	%

Systemwide Sales and Franchised Sales

The following table presents the percent change in Systemwide sales for the quarter ended March 31, 2023:

SYSTEMWIDE SALES*
	Quarter Ended March 31, 2023
	Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	13	%	13	%
International Operated Markets	4		10
International Developmental Licensed Markets & Corporate	10		17
Total	9	%	13	%

*Unlike comparable sales, the Company has not excluded sales from hyperinflationary markets from Systemwide sales as these sales are the basis on which the Company calculates and records revenues.

Franchised sales are not recorded as revenues by the Company, but are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The following table presents Franchised sales and the related increases/(decreases) for the quarters ended March 31, 2023 and 2022:

FRANCHISED SALES
Dollars in millions
Quarters Ended March 31,	2023		2022		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	$	11,742.1	$	10,429.1	13	%	13	%
International Operated Markets	8,668.1		8,111.9		7		13
International Developmental Licensed Markets & Corporate	7,640.4		6,946.7		10		18
Total	$	28,050.6	$	25,487.7	10	%	14	%
Ownership type
Conventional franchised	$	20,345.7	$	18,443.3	10	%	13	%
Developmental licensed	4,719.5		4,131.3		14		21
Foreign affiliated	2,985.4		2,913.1		2		13
Total	$	28,050.6	$	25,487.7	10	%	14	%

21

Restaurant Margins

Franchised restaurant margins are measured as revenues from franchised restaurants less franchised restaurant occupancy costs. Franchised revenues include rent and royalties based on a percent of sales, and initial fees. Franchised restaurant occupancy costs include lease expense and depreciation, as the Company generally owns or secures a long-term lease on the land and building for the restaurant location.

Company-operated restaurant margins are measured as sales from Company-operated restaurants less costs for food & paper, payroll & employee benefits and occupancy & other operating expenses necessary to run an individual restaurant. Company-operated margins exclude costs that are not allocated to individual restaurants, primarily payroll & employee benefit costs of non-restaurant support staff, which are included in Selling, general and administrative expenses.

RESTAURANT MARGINS
Dollars in millions
	Amount				Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
Quarters Ended March 31,	2023		2022
Franchised
U.S.	$	1,361.9	$	1,192.5	14	%	14	%
International Operated Markets	1,209.3		1,125.7		7		14
International Developmental Licensed Markets & Corporate	418.1		360.6		16		23
Total	$	2,989.3	$	2,678.8	12	%	15	%
Company-operated
U.S.	$	109.1	$	98.3	11	%	11	%
International Operated Markets	192.0		241.2		(20)		(16)
International Developmental Licensed Markets & Corporate	n/m		n/m		n/m		n/m
Total	$	301.2	$	343.2	(12)	%	(9)	%
Total restaurant margins
U.S.	$	1,471.0	$	1,290.8	14	%	14	%
International Operated Markets	1,401.3		1,366.9		3		9
International Developmental Licensed Markets & Corporate	n/m		n/m		n/m		n/m
Total	$	3,290.5	$	3,022.0	9	%	12	%

n/m Not meaningful

•Total restaurant margins increased $268.5 million, or 9% (12% in constant currencies). Franchised margins represented over 90% of restaurant margin dollars.

•Results in all segments reflected strong sales-driven Franchised margins.

•Company-operated margins in the U.S. and International Operated Markets segment reflected strong positive sales performance, with results for the International Operated Markets segment more than offset by the impact of the Company's exit from Russia in the second quarter of 2022 and by ongoing inflationary cost pressures.

•Total restaurant margins included depreciation and amortization expense of $391.3 million.

Selling, General & Administrative Expenses

•Selling, general and administrative expenses decreased $24.4 million, or 4% (2% in constant currencies). Results primarily reflect the comparison to prior year costs related to the 2022 Worldwide Owner/Operator convention.

•Selling, general and administrative expenses as a percent of Systemwide sales were 2.2% and 2.4% for the quarters ended 2023 and 2022, respectively.

22

Other Operating (Income) Expense, Net

OTHER OPERATING (INCOME) EXPENSE, NET
Dollars in millions
	Quarters Ended
	March 31,
	2023		2022
Gains on sales of restaurant businesses	$	(13.1)	$	(5.8)
Equity in earnings of unconsolidated affiliates	(39.2)		(31.3)
Asset dispositions and other (income) expense, net	0.4		(29.5)
Impairment and other charges (gains), net	180.5		127.1
Total	$	128.6	$	60.5

•Asset dispositions and other (income) expense, net primarily reflected the comparison to a prior year gain as a result of an increase to fair value of an existing restaurant joint venture in connection with the buyout of a joint venture partner within the International Operated Markets segment.

•Impairment and other charges (gains), net reflected $180 million of pre-tax restructuring charges related to Accelerating the Organization.

Results for the prior year reflected net pre-tax expenses of $127 million, primarily related to Russia.

23

Operating Income

OPERATING INCOME & OPERATING MARGIN
Dollars in millions
Quarters Ended March 31,	2023			2022			Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	$	1,295.1		$	1,151.0		13	%	13	%
International Operated Markets	1,192.7			1,129.2			6		12
International Developmental Licensed Markets & Corporate	44.6			32.4			38		n/m
Total	$	2,532.4		$	2,312.6		10	%	14	%
Operating margin	42.9		%	40.8		%

•Operating Income: Operating income increased $219.8 million, or 10% (14% in constant currencies). Results reflected $180 million of pre-tax restructuring charges related to Accelerating the Organization. Results for the prior year reflected $127 million of costs, primarily related to Russia.

OPERATING INCOME & OPERATING MARGIN RECONCILIATION*

Dollars in millions

	Quarters Ended March 31,
	2023		2022		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
GAAP operating income	$2,532.4		$2,312.6		10	%	14	%
(Gains)/charges	180.5		127.1
Non-GAAP operating income	$2,712.9		$2,439.7		11	%	15	%
Non-GAAP operating margin	46.0	%	43.1	%

*Refer to the Impairment and other charges (gains), net line within the Other Operating (Income) Expense, Net section on page 23 of this report for details of the charges in this table.

•Excluding the current and prior year charges shown in the table above, operating income increased 11% (15% in constant currencies).

•U.S.: Operating income primarily reflected sales-driven growth in Franchised margins.

•International Operated Markets: Results reflected strong operating performance across the majority of the segment.

•International Developmental Licensed Markets & Corporate: Results reflected strong operating performance across the segment, led by Brazil and China.

•Operating Margin: Operating margin is defined as operating income as a percent of total revenues. The contributions to operating margin differ by segment due to each segment's ownership structure, primarily due to the relative percentage of franchised versus Company-operated restaurants. Additionally, temporary restaurant closures, which vary by segment, impact the contribution of each segment to the consolidated operating margin.

The increase in non-GAAP operating margin was due primarily to sales-driven growth in Franchised margins.

Interest Expense

•Interest expense increased 15% (16% in constant currencies), primarily due to higher average interest rates as well as higher average debt balances when compared to the prior year.

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Nonoperating (Income) Expense, Net

NONOPERATING (INCOME) EXPENSE, NET
Dollars in millions
	Quarters Ended
	March 31,
	2023		2022
Interest income	$	(37.9)	$	(2.6)
Foreign currency and hedging activity	(12.9)		(11.3)
Other (income) expense, net	(13.5)		498.0
Total	$	(64.3)	$	484.1

•Interest income increased, primarily due to higher average interest rates when compared to the prior year.

•Foreign currency and hedging activity includes net gains or losses on certain hedges that reduce the exposure to variability on certain intercompany foreign currency cash flow streams.

•Other (income) expense, net for the prior year included $500 million of nonoperating expense related to the settlement of a tax audit in France.

Income Taxes

•The effective income tax rate was 20.5% and 28.3% for the quarters ended March 31, 2023 and 2022, respectively.

•Excluding the tax impacts of current and prior year charges (as described within the Operating Income & Operating Margin Reconciliation on page 24 of this report) and the prior year nonoperating expense related to an international tax audit, the effective income tax rate for the quarters ended March 31, 2023 and 2022 was 20.9% and 21.3%, respectively.

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Cash Flows

The Company has a long history of generating significant cash from operations and has substantial credit capacity to fund operating and discretionary spending such as capital expenditures, debt repayments, dividends and share repurchases.

Cash provided by operations totaled $2.4 billion and exceeded capital expenditures by $1.9 billion. Cash provided by operations increased $287 million, primarily due to improved operating results.

Cash used for investing activities totaled $741 million, an increase of $187 million. The increase was primarily due to higher capital expenditures.

Cash used for financing activities totaled $558 million, a decrease of $3.3 billion. The decrease was primarily due to lower treasury stock purchases and $1.1 billion of debt issuances in the first quarter 2023 compared to $1.4 billion in debt repayments in the first quarter 2022.

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Outlook

Based on current conditions, the following is provided to assist in forecasting the Company's future results for 2023.

•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 selling, general and administrative expenses of about 2.2% to 2.3% of Systemwide sales.

•The Company expects 2023 operating margin percent to be about 45%.

•Based on current interest and foreign currency exchange rates, the Company expects interest expense for the full year 2023 to increase between 10% and 12%, driven primarily by higher average interest rates.

•The Company expects the effective income tax rate for the full year 2023 to be in the 20% to 22% range. Some volatility may result in a quarterly tax rate outside of the annual range.

•The Company expects 2023 capital expenditures to be between $2.2 and $2.4 billion, about half of which will be directed towards new restaurant unit expansion across the U.S. and International Operated Markets. Globally, the Company expects to open about 1,900 restaurants. The Company will open more than 400 restaurants in the U.S. and International Operated Markets segments, and developmental licensees and affiliates will contribute capital towards about 1,500 restaurant openings in their respective markets. The Company expects about 1,500 net restaurant additions in 2023.

•The Company expects to achieve a free cash flow conversion rate greater than 90%.

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Cautionary Statement Regarding Forward-Looking Statements

The information in this report contains forward-looking statements about future events and circumstances and their effects upon revenues, expenses and business opportunities. Generally speaking, any statement in this report not based upon historical fact is a forward-looking statement. Forward-looking statements can also be identified by the use of forward-looking or conditional words, such as “could,” “should,” “can,” “continue,” “estimate,” “forecast,” “intend,” “look,” “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “remain,” “confident” and “commit” or similar expressions. In particular, statements regarding our plans, strategies, prospects and expectations regarding our business and industry are forward-looking statements. They reflect our expectations, are not guarantees of performance and speak only as of the dates the statements are made. Except as required by law, we do not undertake to update such forward-looking statements. You should not rely unduly on forward-looking statements.

Risk Factors

Our business results are subject to a variety of risks, including those that are described below and elsewhere in our filings with the

Securities and Exchange Commission. The risks described below are not the only risks we face. Additional risks not currently known to us or that we currently deem to be immaterial may also significantly adversely affect our business. If any of these risks were to materialize or intensify, our expectations (or the underlying assumptions) may change and our performance may be adversely affected.

STRATEGY AND BRAND

If we do not successfully evolve and execute against our business strategies, we may not be able to drive business growth.

To drive Systemwide sales, operating income and free cash flow growth, our business strategies – including the components of our Accelerating the Arches growth strategy – must be effective in maintaining and strengthening customer appeal and capturing additional market share. Whether these strategies are successful depends mainly on our System’s continued ability to:

•capitalize on our global scale, iconic brand and local market presence to build upon our historic strengths and competitive advantages, including by maximizing our marketing, committing to our core menu items, and doubling down on digital, delivery, drive thru and restaurant development;

•innovate and differentiate the McDonald’s experience, including by preparing and serving our food in a way that balances value and convenience to our customers with profitability;

•build upon our investments to transform and enhance the customer experience;

•run great restaurants by driving efficiencies and expanding capacities while prioritizing health and safety;

•accelerate our existing strategies, including through growth opportunities; and

•evolve and adjust our strategies in response to, among other things, changing consumer behavior, and other events impacting our results of operations and liquidity.

If we are delayed or unsuccessful in evolving or executing against our strategies, if the execution of our strategies proves to be more difficult, costly or time consuming than expected, or if our strategies do not yield the desired results, our business, financial condition and results of operations may suffer.

Failure to preserve the value and relevance of our brand could have an adverse impact on our financial results.

To continue to be successful in the future, we believe we must preserve, enhance and leverage the value and relevance of our brand, including our corporate purpose, mission and values. Brand value is based in part on consumer perceptions, which are affected by a variety of factors, including the nutritional content and preparation of our food, the ingredients we use, the manner in which we source commodities and general business practices across the System, including the people practices at McDonald’s restaurants. Consumer acceptance of our offerings is subject to change for a variety of reasons, and some changes can occur rapidly. For example, nutritional, health, environmental and other scientific studies and conclusions, which continuously evolve and may have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that affect the “informal eating out” (“IEO”) segment or perceptions of our brand, generally or relative to available alternatives. Our business could also be impacted by business incidents or practices, whether actual or perceived, particularly if they receive considerable publicity or result in litigation, as well as by our position or perceived lack of position on environmental, social responsibility, public policy, geopolitical and similar matters. Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the quick-service category of the IEO segment or our brand, culture, operations, suppliers or franchisees. If we are unsuccessful in addressing adverse commentary or perceptions, whether or not accurate, our brand and financial results may suffer.

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If we do not anticipate and address industry trends and evolving consumer preferences and effectively execute our pricing, promotional and marketing plans, our business could suffer.

Our continued success depends on our System’s ability to build upon our historic strengths and competitive advantages. In order to do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and industry trends in food sourcing, food preparation, food offerings, and consumer behavior and preferences, including with respect to the use of digital channels and environmental and social responsibility matters. If we are not able to predict, or quickly and effectively respond to, these changes, or if our competitors are able to do so more effectively, our financial results could be adversely impacted.

Our ability to build upon our strengths and advantages also depends on the impact of pricing, promotional and marketing plans across the System, and the ability to adjust these plans to respond quickly and effectively to evolving customer behavior and preferences, as well as shifting economic and competitive conditions. Existing or future pricing strategies and marketing plans, as well as the value proposition they represent, are expected to continue to be important components of our business strategy. However, they may not be successful, or may not be as successful as the efforts of our competitors, which could negatively impact sales, guest counts and market share.

Additionally, we operate in a complex and costly advertising environment. Our marketing and advertising programs may not be successful in reaching consumers in the way we intend. Our success depends in part on whether the allocation of our advertising and marketing resources across different channels, including digital, allows us to reach consumers effectively, efficiently and in ways that are meaningful to them. If our advertising and marketing programs are not successful, or are not as successful as those of our competitors, our sales, guest counts and market share could decrease.

Our investments to transform and enhance the customer experience, including through technology, may not generate the expected results.

Our long-term business objectives depend on the successful Systemwide execution of our strategies. We continue to build upon our investments in restaurant development, technology, digital engagement and delivery in order to transform and enhance the customer experience. As part of these investments, we are continuing to place emphasis on improving our service model and strengthening relationships with customers, in part through digital channels and loyalty initiatives, mobile ordering and payment systems, and enhancing our drive thru technologies, which efforts may not generate expected results. We also continue to expand and refine our delivery initiatives, including through integrating delivery and mobile ordering. Utilizing a third-party delivery service may not have the same level of profitability as a non-delivery transaction, and may introduce additional food quality, food safety and customer satisfaction risks. If these customer experience initiatives are not successfully executed, or if we do not fully realize the intended benefits of these significant investments, our business results may suffer.

We face intense competition in our markets, which could hurt our business.

We compete primarily in the IEO segment, which is highly competitive. We also face sustained, intense competition from traditional, fast casual and other competitors, which may include many non-traditional market participants such as convenience stores, grocery stores, coffee shops and online retailers. We expect our environment to continue to be highly competitive, and our results in any particular reporting period may be impacted by a contracting IEO segment or by new or continuing actions, product offerings or consolidation of our competitors and third-party partners, which may have a short- or long-term impact on our results.

We compete primarily on the basis of product choice, quality, affordability, service and location. In particular, we believe our ability to compete successfully in the current market environment depends on our ability to improve existing products, successfully develop and introduce new products, price our products appropriately, deliver a relevant customer experience, manage the complexity of our restaurant operations, manage our investments in restaurant development, technology, digital engagement and delivery, and respond effectively to our competitors’ actions or offerings or to unforeseen disruptive actions. There can be no assurance these strategies will be effective, and some strategies may be effective at improving some metrics while adversely affecting others, which could have the overall effect of harming our business.

We may not be able to adequately protect our intellectual property or adequately ensure that we are not infringing the intellectual property of others, which could harm the value of the McDonald’s brand and our business.

Our success depends on our continued ability to use our existing trademarks and service marks in order to increase brand awareness and further develop our branded products in both domestic and international markets. We rely on a combination of trademarks, copyrights, service marks, trade secrets, patents and other intellectual property rights to protect our brand and branded products.

We have registered certain trademarks and have other trademark registrations pending in the U.S. and certain foreign jurisdictions. The trademarks that we currently use have not been, and may never be, registered in all of the countries outside of the U.S. in which we do business or may do business in the future. It may be costly and time consuming to protect our intellectual property, and the steps we have taken to do so in the U.S. and foreign countries may not be adequate. In addition, the steps we have taken may not adequately ensure that we do not infringe the intellectual property of others, and third parties may claim infringement by us in the future. In particular, we may be involved in intellectual property claims, including often aggressive or opportunistic attempts to enforce patents used in information technology systems, which might affect our operations and results. Any claim of infringement, whether or not it has merit, could be time consuming, result in costly litigation and harm our business.

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In addition, we cannot ensure that franchisees and other third parties who hold licenses to our intellectual property will not take actions that adversely affect the value of our intellectual property.

OPERATIONS

The global scope of our business subjects us to risks that could negatively affect our business.

We encounter differing cultural, regulatory, geopolitical and economic environments within and among the more than 100 countries where McDonald’s restaurants operate, and our ability to achieve our business objectives depends on the System’s success in these environments. Meeting customer expectations is complicated by the risks inherent in our global operating environment, and our global success is partially dependent on our System’s ability to leverage operating successes across markets and brand perceptions. Planned initiatives may not have appeal across multiple markets with McDonald’s customers and could drive unanticipated changes in customer perceptions and market share.

Disruptions in operations or price volatility in a market can also result from governmental actions, such as price, foreign exchange or trade-related tariffs or controls, trade policies and regulations, sanctions and counter sanctions, government-mandated closure of our, our franchisees’ or our suppliers’ operations, and asset seizures. Such disruptions or volatility can also result from acts of war, terrorism or other hostilities. For example, the war between Russia and Ukraine has resulted in volatile and unpredictable conditions throughout the region, exacerbated volatile macroeconomic conditions and increased pressure on our supply chain and the availability and costs of commodities, including energy, which we expect to continue to impact our financial results. The broader impacts of the war and related sanctions, including on macroeconomic conditions, geopolitical tensions, consumer demand and the ability of us and our franchisees to operate in certain geographic areas, may also continue to have an adverse impact on our business and financial results.

While we may face challenges and uncertainties in any of the markets in which we operate, such challenges and uncertainties are often heightened in developing markets, which may entail a relatively higher risk of political instability, economic volatility, crime, corruption and social and ethnic unrest. In many cases, such challenges may be exacerbated by the lack of an independent and experienced judiciary and uncertainty in how local law is applied and enforced, including in areas most relevant to commercial transactions and foreign investment. An inability to manage effectively the risks associated with our international operations could adversely affect our business and financial results.

Supply chain interruptions may increase costs or reduce revenues.

We depend on the effectiveness of our supply chain management to assure a reliable and sufficient supply of quality products, equipment and other materials on favorable terms. Although many of these items are sourced from a wide variety of suppliers in countries around the world, certain items have limited suppliers, which may increase our reliance on those suppliers. Supply chain interruptions and related price increases have in the past and may in the future adversely affect us as well as our suppliers and franchisees, whose performance may have a significant impact on our results. Such interruptions and price increases could be caused by shortages, inflationary pressures, unexpected increases in demand, transportation-related issues, labor-related issues, technology-related issues, weather-related events, natural disasters, acts of war, terrorism or other hostilities, or other factors beyond the control of us or our suppliers or franchisees. Interruptions in our System’s supply chain or ineffective contingency planning can increase our costs and/or limit the availability of products, equipment and other materials that are critical to our System’s operations or to restaurant development.

Our franchise business model presents a number of risks.

Our success as a heavily franchised business relies to a large degree on the financial success and cooperation of our franchisees, including our developmental licensees and affiliates. Our restaurant margins arise from two sources: fees from franchised restaurants (e.g., rent and royalties based on a percentage of sales) and, to a lesser degree, sales from Company-operated restaurants. Our franchisees and developmental licensees manage their businesses independently and therefore are responsible for the day-to-day operation of their restaurants. The revenues we realize from franchised restaurants are largely dependent on the ability of our franchisees to grow their sales. Business risks affecting our operations also affect our franchisees. If franchisee sales trends worsen, or any of such risks materialize or intensify, our financial results could be negatively affected, which may be material.

Our success also relies on the willingness and ability of our independent franchisees and affiliates to implement major initiatives, which may include financial investment, and to remain aligned with us on operating, value/promotional and capital-intensive reinvestment plans. The ability of franchisees to contribute to the achievement of our plans is dependent in large part on the availability to them of funding at reasonable interest rates and may be negatively impacted by the financial markets in general, by their or our creditworthiness or by banks’ lending practices. If our franchisees are unwilling or unable to invest in major initiatives or are unable to obtain financing at commercially reasonable rates, or at all, our future growth and results of operations could be adversely affected.

Our operating performance could also be negatively affected if our franchisees experience food safety or other operational problems or project an image inconsistent with our brand and values, particularly if our contractual and other rights and remedies are limited, costly to exercise or subjected to litigation and potential delays. If franchisees do not successfully operate restaurants in a manner consistent with our required standards, our brand’s image and reputation could be harmed, which in turn could hurt our business and operating results.

Our ownership mix also affects our results and financial condition. The decision to own restaurants or to operate under franchise or license agreements is driven by many factors whose interrelationship is complex. The benefits of our more heavily franchised structure depend on various factors, including whether we have effectively selected franchisees, licensees and/or affiliates that meet our rigorous

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standards, whether we are able to successfully integrate them into our structure and whether their performance and the resulting ownership mix supports our brand and financial objectives.

Challenges with respect to labor, including availability and cost, could impact our business and results of operations.

Our success depends in part on our System’s ability to effectively attract, recruit, develop, motivate and retain qualified individuals to work in McDonald’s restaurants and to maintain appropriately-staffed restaurants in an intensely competitive labor market. We and our franchisees have experienced and may continue to experience challenges in adequately staffing certain McDonald’s restaurants, which can negatively impact operations, including speed of service to customers, and customer satisfaction levels. The System’s ability to meet its labor needs is generally subject to external factors, including the availability of sufficient workforce, unemployment levels and prevailing wages in the markets in which we operate.

Further, our System has experienced increased costs and competition associated with attracting, recruiting, developing, motivating and retaining qualified employees, as well as with promoting awareness of the opportunities of working at McDonald’s restaurants. We and our franchisees also continue to be impacted by increasingly complex U.S. and international laws and regulations affecting our respective workforces. These laws and regulations are increasingly focused on, and in certain cases impose requirements with respect to, employment matters such as wages and hours, healthcare, immigration, retirement and other employee benefits and workplace practices. Such laws and regulations can expose us and our franchisees to increased costs and other effects of compliance, including potential liability, and all such labor and compliance costs could have a negative impact on our Company-operated margins and franchisee profitability.

Our potential exposure to reputational and other harm regarding our workplace practices or conditions or those of our independent franchisees or suppliers, including those giving rise to claims of harassment or discrimination (or perceptions thereof) or workplace safety, could have a negative impact on consumer perceptions of us and our business. Additionally, economic action, such as boycotts, protests, work stoppages or campaigns by labor organizations, could adversely affect us (including our ability to attract, recruit, develop, motivate and retain talent) or our franchisees and suppliers, whose performance may have a significant impact on our results.

Effective succession planning is important to our continued success.

Effective succession planning for management is important to our long-term success. Failure to effectively attract, recruit, develop, motivate and retain qualified key personnel, or to execute smooth personnel transitions, could disrupt our business and adversely affect our results.

Food safety concerns may have an adverse effect on our business.

Our ability to increase sales and profits depends on our System’s ability to meet expectations for safe food and on our ability to manage the potential impact on McDonald’s of food-borne illnesses and food or product safety issues that may arise in the future, including in the supply chain, restaurants or delivery. Food safety is a top priority, and we dedicate substantial resources aimed at ensuring that our customers enjoy safe food products, including as our menu and service model evolve. However, food safety events, including instances of food-borne illness, occur within the food industry and our System from time to time and could occur in the future. Instances of food tampering, food contamination or food-borne illness, whether actual or perceived, could adversely affect our brand, reputation and financial results.

If we do not effectively manage our real estate portfolio, our operating results may be negatively impacted.

We have significant real estate operations, primarily in connection with our restaurant business. We generally own or secure a long-term lease on the land and building for conventional franchised and Company-operated restaurant sites. We seek to identify and develop restaurant locations that offer convenience to customers and long-term sales and profit potential. As we generally secure long-term real estate interests for our restaurants, we have limited flexibility to quickly alter our real estate portfolio. The competitive business landscape continues to evolve in light of changing business trends, consumer preferences, trade area demographics, consumer use of digital, delivery and drive thru, local competitive positions and other economic factors. If our restaurants are not located in desirable locations, or if we do not evolve in response to these factors, it could adversely affect Systemwide sales and profitability.

Our real estate values and the costs associated with our real estate operations are also impacted by a variety of other factors, including governmental regulations, insurance, zoning, tax and eminent domain laws, interest rate levels, the cost of financing, natural disasters, acts of war, terrorism or other hostilities, or other factors beyond our control. A significant change in real estate values, or an increase in costs as a result of any of these factors, could adversely affect our operating results.

Information technology system failures or interruptions, or breaches of network security, may impact our operations or cause reputational harm.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties to conduct our business, whether developed and maintained by us or provided by third parties. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions.

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Security incidents or breaches have from time to time occurred and may in the future occur involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers. These may include such things as unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, introduction of malware or ransomware and other disruptive problems caused by hackers. Certain of these technology systems contain personal, financial and other information of our customers, employees, franchisees and their employees, suppliers and other third parties, as well as financial, proprietary and other confidential information related to our business. Despite response procedures and measures in place in the event of an incident, a security breach could result in disruptions, shutdowns, or the theft or unauthorized disclosure of such information. The actual or alleged occurrence of any of these incidents could result in mitigation costs, reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including criminal penalties or civil liabilities.

Despite the implementation of business continuity measures, any of these technology systems could become vulnerable to damage, disability or failures due to fire, power loss, telecommunications failure or other catastrophic events. Certain technology systems may also become vulnerable, unreliable or inefficient in cases where technology vendors limit or terminate product support and maintenance. Our increasing reliance on third-party systems also subjects us to risks faced by those third-party businesses, including operational, security and credit risks. If technology systems were to fail or otherwise be unavailable, or if business continuity or disaster recovery plans were not effective, and we were unable to recover in a timely manner, we could experience an interruption in our or our franchisees’ operations.

LEGAL AND REGULATORY

Increasing regulatory and legal complexity may adversely affect our business and financial results.

Our regulatory and legal environment worldwide exposes us to complex compliance, litigation and similar risks that could affect our operations and results in material ways. Many of our markets are subject to increasing, conflicting and highly prescriptive regulations involving, among other matters, restaurant operations, product packaging, marketing, the nutritional and allergen content and safety of our food and other products, labeling and other disclosure practices. Compliance efforts with those regulations may be affected by ordinary variations in food preparation among our own restaurants and the need to rely on the accuracy and completeness of information from third-party suppliers. We also are subject to increasing public focus, including by governmental and non-governmental organizations, on environmental, social responsibility and corporate governance (“ESG”) matters. Our success depends in part on our ability to manage the impact of regulations and other initiatives that can affect our business plans and operations, which have increased and may continue to increase our costs of doing business and exposure to litigation, governmental investigations or other proceedings.

We are also subject to legal proceedings that may adversely affect our business, including, but not limited to, class actions, administrative proceedings, government investigations and proceedings, shareholder proceedings, employment and personal injury claims, landlord/tenant disputes, supplier-related disputes, and claims by current or former franchisees. Regardless of whether claims against us are valid or whether we are found to be liable, claims may be expensive to defend and may divert management’s attention away from operations.

Litigation and regulatory action concerning our relationship with franchisees and the legal distinction between our franchisees and us for employment law or other purposes, if determined adversely, could increase costs, negatively impact our business operations and the business prospects of our franchisees and subject us to incremental liability for their actions. Similarly, although our commercial relationships with our suppliers remain independent, there may be attempts to challenge that independence, which, if determined adversely, could also increase costs, negatively impact the business prospects of our suppliers, and subject us to incremental liability for their actions.

Our results could also be affected by the following:

•the relative level of our defense costs, which vary from period to period depending on the number, nature and procedural status of pending proceedings;

•the cost and other effects of settlements, judgments or consent decrees, which may require us to make disclosures or take other actions that may affect perceptions of our brand and products; and

•adverse results of pending or future litigation, including litigation challenging the composition and preparation of our products, or the appropriateness or accuracy of our marketing or other communication practices.

A judgment significantly in excess of any applicable insurance coverage or third-party indemnity could materially adversely affect our financial condition or results of operations. Further, adverse publicity resulting from claims may hurt our business. If we are unable to effectively manage the risks associated with our complex regulatory and legal environment, it could have a material adverse effect on our business and financial condition.

Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.

We are subject to income and other taxes in the U.S. and foreign jurisdictions, and our operations, plans and results are affected by tax and other initiatives around the world. In particular, we are affected by the impact of changes to tax laws or policy or related authoritative interpretations. We are also impacted by settlements of pending or any future adjustments proposed by taxing and governmental authorities inside and outside of the U.S. in connection with our tax audits, all of which will depend on their timing, nature and scope. Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results.

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Changes in accounting standards or the recognition of impairment or other charges may adversely affect our future operations and results.

New accounting standards or changes in financial reporting requirements, accounting principles or practices, including with respect to our critical accounting estimates, could adversely affect our future results. We may also be affected by the nature and timing of decisions about underperforming markets or assets, including decisions that result in impairment or other charges that reduce our earnings.

In assessing the recoverability of our long-lived assets, we consider changes in economic conditions and make assumptions regarding estimated future cash flows and other factors. These estimates are highly subjective and can be significantly impacted by many factors such as global and local business and economic conditions, operating costs, inflation, interest rate levels, competition, consumer and demographic trends and our restructuring activities. If our estimates or underlying assumptions change in the future, we may be required to record impairment charges. Any such changes could have a significant adverse effect on our reported results for the affected periods.

If we fail to comply with privacy and data protection laws, we could be subject to legal proceedings and penalties, which could negatively affect our financial results or brand perceptions.

We are subject to legal and compliance risks and associated liability related to privacy and data protection requirements, including those associated with our technology-related services and platforms made available to business partners, customers, employees, franchisees or other third parties. An increasing number of our markets have enacted new privacy and data protection requirements (including the European Union’s General Data Protection Regulation and various U.S. state-level laws), and further requirements are likely to be proposed or enacted in the future. Failure to comply with these privacy and data protection laws could result in legal proceedings and substantial penalties and materially adversely impact our financial results or brand perceptions.

MACROECONOMIC AND MARKET CONDITIONS

Unfavorable general economic conditions could adversely affect our business and financial results.

Our results of operations are substantially affected by economic conditions, including inflationary pressures, which can vary significantly by market and can impact consumer disposable income levels and spending habits. Economic conditions can be impacted by a variety of factors, including hostilities, epidemics, pandemics and actions taken by governments to manage national and international economic matters, whether through austerity, stimulus measures or trade measures, and initiatives intended to control wages, unemployment, credit availability, inflation, taxation and other economic drivers. Sustained adverse economic conditions or periodic adverse changes in economic conditions put pressure on our operating performance and business continuity disruption planning, and our business and financial results may suffer as a result.

Our results of operations are also affected by fluctuations in currency exchange rates, and unfavorable currency fluctuations could adversely affect reported earnings.

Health epidemics or pandemics could adversely affect our business and financial results.

Health epidemics or pandemics – such as the global outbreak of COVID-19 in early 2020 – have in the past and may in the future impact macroeconomic conditions, consumer behavior, labor availability and supply chain management, as well as local operations in impacted markets, all of which can adversely affect our business, financial results and outlook. Governmental responses to health epidemics or pandemics, including operational restrictions, can also affect the foregoing items and adversely affect our business and financial results. The duration and scope of a health epidemic or pandemic can be difficult to predict and depends on many factors, including the emergence of new variants and the availability, acceptance and effectiveness of preventative measures. A health epidemic or pandemic may also heighten other risks disclosed in these Risk Factors, including, but not limited to, those related to the availability and costs of labor and commodities, supply chain interruptions, consumer behavior, and consumer perceptions of our brand and industry.

Changes in commodity and other operating costs could adversely affect our results of operations.

The profitability of our Company-operated restaurants depends in part on our ability to anticipate and react to changes in commodity costs, including food, paper, supplies, fuel and utilities, as well as distribution and other operating costs, including labor. Volatility in certain commodity prices and fluctuations in labor costs have adversely affected and in the future could adversely affect our operating results by impacting restaurant profitability. The commodity markets for some of the ingredients we use, such as beef, chicken and pork, are particularly volatile due to factors such as seasonal shifts, climate conditions, industry demand and other macroeconomic conditions, international commodity markets, food safety concerns, product recalls, government regulation, and acts of war, terrorism or other hostilities, all of which are beyond our control and, in many instances, unpredictable. Our System can only partially address future price risk through hedging and other activities, and therefore increases in commodity costs could have an adverse impact on our profitability.

A decrease in our credit ratings or an increase in our funding costs could adversely affect our profitability.

Our credit ratings may be negatively affected by our results of operations or changes in our debt levels. As a result, our interest expense, the availability of acceptable counterparties, our ability to obtain funding on favorable terms, our collateral requirements and our operating or financial flexibility could all be negatively affected, especially if lenders were to impose new operating or financial covenants.

Our operations may also be impacted by regulations affecting capital flows, financial markets or financial institutions, which can limit our ability to manage and deploy our liquidity or increase our funding costs. Any such events could have a material adverse effect on our business and financial condition.

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The trading volatility and price of our common stock may be adversely affected by many factors.

Many factors affect the trading volatility and price of our common stock in addition to our operating results and prospects. These factors, many of which are beyond our control, include the following:

•the unpredictable nature of global economic and market conditions;

•governmental action or inaction in light of key indicators of economic activity or events that can significantly influence financial markets, particularly in the U.S., which is the principal trading market for our common stock, and media reports and commentary about economic, trade or other matters, even when the matter in question does not directly relate to our business;

•trading activity in our common stock, in derivative instruments with respect to our common stock or in our debt securities, which can be affected by: market commentary (including commentary that may be unreliable or incomplete); unauthorized disclosures about our performance, plans or expectations about our business; our actual performance and creditworthiness; investor confidence, driven in part by expectations about our performance; actions by shareholders and others seeking to influence our business strategies; portfolio transactions in our common stock by significant shareholders; and trading activity that results from the ordinary course rebalancing of stock indices in which McDonald’s may be included, such as the S&P 500 Index and the Dow Jones Industrial Average;

•the impact of our stock repurchase program or dividend rate; and

•the impact of corporate actions, including changes to our corporate structure, and market and third-party perceptions and assessments of such actions, including those we may take from time to time as we implement our business strategies in light of changing business, legal and tax considerations.

Our business is subject to an increasing focus on ESG matters.

In recent years, there has been an increasing focus by stakeholders – including employees, franchisees, customers, suppliers, governmental and non-governmental organizations and investors – on ESG matters. A failure, whether real or perceived, to address ESG matters or to achieve progress on our ESG initiatives on the anticipated timing or at all, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, consumer perceptions of our brand, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity. Conversely, our taking a position, whether real or perceived, on ESG, public policy, geopolitical and similar matters could also adversely impact our business.

The standards we set for ourselves regarding ESG matters, and our ability to meet such standards, may also impact our business. For example, we are working to manage risks and costs to our System related to climate change, greenhouse gases, and diminishing energy and water resources, and we have announced initiatives relating to, among other things, climate action, sustainability, responsible sourcing and increasing diverse representation across our System. We have faced increased scrutiny related to reporting on and achieving these initiatives, as well as continued public focus on similar matters, such as packaging and waste, animal health and welfare, deforestation and land use. We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks. Moreover, addressing ESG matters requires Systemwide coordination and alignment, and the standards by which certain ESG matters are measured are evolving and subject to assumptions that could change over time.

Events such as severe weather conditions, natural disasters, hostilities, social unrest and climate change, among others, can adversely affect our results and prospects.

Severe weather conditions, natural disasters, acts of war, terrorism or other hostilities, social unrest or climate change (or expectations about them) can adversely affect consumer behavior and confidence levels, supply availability and costs and local operations in impacted markets, all of which can affect our results and prospects. Climate change may also increase the frequency and severity of weather-related events and natural disasters. Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes to the disclosures made in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 regarding these matters.

Item 4. Controls and Procedures

Disclosure Controls

An evaluation was conducted under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of March 31, 2023. Based on that evaluation, the CEO and CFO concluded that the Company’s

34

disclosure controls and procedures were effective as of such date to provide reasonable assurances that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

The Company is in the process of implementing a comprehensive, multi-year finance and technology transformation initiative to migrate its general ledger, financial close and consolidation processes onto new financial systems. The Company is performing the implementation in the ordinary course of business to increase efficiency and to modernize the tools and technology used in its key financial processes. This is not in response to any identified deficiency or weakness in the Company's internal control over financial reporting. As the phased implementation of the systems continues, the Company has modified certain processes and procedures to enhance the quality of internal control over financial reporting. The Company will continue to monitor and modify, as needed, the design and operating effectiveness of key control activities to align with the updated business processes and capabilities of the new financial systems.

Except for these changes, the Company’s management, including the CEO and CFO, confirm there has been no change in the Company's internal control over financial reporting during the fiscal quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There were no material changes to the disclosure made in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 regarding these matters.

Item 1A. Risk Factors

For a discussion of risk factors affecting the Company's business, refer to the “Risk Factors" section in Part I, Item 2 of this report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities*

The following table presents information related to repurchases of common stock the Company made during the quarter ended March 31, 2023:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 1-31, 2023	1,509	$	266.04	1,509	$	9,384,005,522
February 1-28, 2023	1,237,905	267.98		1,237,905	9,052,266,351
March 1-31, 2023	935,551	269.69		935,551	8,799,954,379
Total	2,174,965	$	268.72	2,174,965

*    Subject to applicable law, the Company may repurchase shares directly in the open market, in privately negotiated transactions or pursuant to derivative instruments and plans complying with Rule 10b5-1 under the Exchange Act, among other types of transactions and arrangements.

(1)On December 31, 2019, the Company's Board of Directors approved a share repurchase program, effective January 1, 2020, that authorized the purchase of up to $15 billion of the Company's outstanding common stock.

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Item 6. Exhibits
Exhibit No.			Description
	(3)	Articles of incorporation; bylaws
		(a)	Restated Certificate of Incorporation, effective May 23, 2019, incorporated herein by reference from Exhibit 3(a) of Form 10-Q (File No. 001-05231), for the quarter ended June 30, 2019.
		(b)	By-Laws, amended and restated effective January 18, 2023, incorporated herein by reference from Exhibit 3.2 of Form 8-K (File No. 001-05231), filed January 19, 2023.
	(4)	Instruments defining the rights of securities holders, including indentures**
		(a)	Senior Debt Securities Indenture, dated October 19, 1996, incorporated herein by reference from Exhibit (4)(a) of Form S-3 (File No. 333-14141), filed October 15, 1996.
		(b)	Subordinated Debt Securities Indenture, dated October 18, 1996, incorporated herein by reference from Exhibit (4)(b) of Form S-3 (File No. 333-14141), filed October 15, 1996.
	(10)	Material contracts
		(a)	McDonald’s Corporation Directors’ Deferred Compensation Plan, amended and restated effective December 31, 2021, incorporated herein by reference from Exhibit 10(a) of Form 10-K (File No. 001-05231), for the year ended December 31, 2021.*
		(b)	McDonald’s Corporation Board of Directors Deferred Compensation Plan, effective January 1, 2022, incorporated herein by reference from Exhibit 10(b) of Form 10-K (File No. 001-05231), for the year ended December 31, 2021.*
		(c)	McDonald’s Deferred Compensation Plan, effective January 1, 2017, incorporated herein by reference from Exhibit 10(b) of Form 10-K (File No. 001-05231), for the year ended December 31, 2016.*
			(i)	First Amendment to the McDonald's Deferred Compensation Plan, effective May 1, 2018, incorporated herein by reference from Exhibit 10(b)(i) of Form 10-Q (File No. 001-05231), for the quarter ended September 30, 2018.*
		(d)	McDonald’s Amended and Restated Deferred Compensation Plan, effective May 26, 2020, incorporated herein by reference from Exhibit 10(c) of Form 10-Q (File No. 001-05231), for the quarter ended June 30, 2020.*
			(i)	First Amendment to the McDonald's Amended and Restated Deferred Compensation Plan, effective December 1, 2021, incorporated herein by reference from Exhibit 10(d)(i) of Form 10-K (File No. 001-05231), for the year ended December 31, 2021.*
		(e)	McDonald’s Corporation Supplemental Profit Sharing and Savings Plan, effective September 1, 2001, incorporated herein by reference from Exhibit 10(c) of Form 10-K (File No. 001-05231), for the year ended December 31, 2001.*
			(i)	First Amendment to the McDonald’s Corporation Supplemental Profit Sharing and Savings Plan, effective January 1, 2002, incorporated herein by reference from Exhibit 10(c)(i) of Form 10-K (File No. 001-05231), for the year ended December 31, 2002.*
			(ii)	Second Amendment to the McDonald’s Corporation Supplemental Profit Sharing and Savings Plan, effective January 1, 2005, incorporated herein by reference from Exhibit 10(c)(ii) of Form 10-K (File No. 001-05231), for the year ended December 31, 2004.*
		(f)	McDonald’s Corporation 2012 Omnibus Stock Ownership Plan, effective June 1, 2012, incorporated herein by reference from Exhibit 10(h) of Form 10-Q (File No. 001-05231), for the quarter ended September 30, 2012.*
		(g)	McDonald’s Corporation Amended and Restated 2012 Omnibus Stock Ownership Plan, effective May 21, 2020, incorporated herein by reference from Exhibit 10(g) of Form 10-Q (File No. 001-05231), for the quarter ended June 30, 2020.*
		(h)	Form of 2014 Executive Stock Option Award Agreement in connection with the 2012 Omnibus Stock Ownership Plan, incorporated herein by reference from Exhibit 10(z) of Form 10-Q (File No. 001-05231), for the quarter ended March 31, 2014.*
		(i)	Form of Executive Confidentiality, Intellectual Property and Restrictive Covenant Agreement, incorporated herein by reference from Exhibit 10(o) of Form 10-Q (File No. 001-05231), for the quarter ended March 31, 2017.*
		(j)	Form of 2018 Executive Stock Option Award Agreement in connection with the 2012 Omnibus Stock Ownership Plan, incorporated herein by reference from Exhibit 10(q) of Form 10-Q (File No. 001-05231), for the quarter ended March 31, 2018.*

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	(k)	McDonald’s Corporation Target Incentive Plan, amended and restated effective February 13, 2019, incorporated herein by reference from Exhibit 10(p) of Form 10-Q (File No. 001-05231), for the quarter ended March 31, 2019.*
	(l)	McDonald’s Corporation Officer Severance Plan, amended and restated effective November 1, 2022, incorporated herein by reference from Exhibit 10(l) of Form 10-K (File No. 001-05231), for the year ended December 31, 2022.*
	(m)	Form of 2019 Executive Stock Option Award Agreement in connection with the 2012 Omnibus Stock Ownership Plan, incorporated herein by reference from Exhibit 10(r) of Form 10-Q (File No. 001-05231), for the quarter ended March 31, 2019.*
	(n)	Separation Agreement and General Release between Stephen Easterbrook and the Company, dated October 31, 2019, incorporated herein by reference from Exhibit 10.1 of Form 8-K filed November 4, 2019.*
	(o)	Separation Agreement and General Release between Jerome N. Krulewitch and the Company, dated October 13, 2020, incorporated herein by reference from Exhibit 10(v) of Form 10-K (File No. 001-05231), for the year ended December 31, 2020.*
	(p)	Form of 2021 Executive Time-Based Restricted Stock Unit Award Agreement in connection with the Amended and Restated 2012 Omnibus Stock Ownership Plan, incorporated herein by reference from Exhibit 10(v) of Form 10-Q (File No. 001-05231), for the quarter ended June 30, 2021.*
	(q)	Form of 2023 Executive Performance-Based Restricted Stock Unit Award Agreement in connection with the Amended and Restated 2012 Omnibus Stock Ownership Plan, filed herewith.*
	(r)	Form of 2023 Executive Stock Option Award Agreement in connection with the Amended and Restated 2012 Omnibus Stock Ownership Plan, filed herewith.*
(31.1)	Rule 13a-14(a) Certification of Chief Executive Officer.
(31.2)	Rule 13a-14(a) Certification of Chief Financial Officer.
(32.1)	18 U.S.C. 1350 Certification of Chief Executive Officer.
(32.2)	18 U.S.C. 1350 Certification of Chief Financial Officer.
(101.INS)	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(101.SCH)	Inline XBRL Taxonomy Extension Schema Document.
(101.CAL)	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
(101.DEF)	Inline XBRL Taxonomy Extension Definition Linkbase Document.
(101.LAB)	Inline XBRL Taxonomy Extension Label Linkbase Document.
(101.PRE)	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
(104)	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

*	Denotes compensatory plan.
**	Certain instruments defining the rights of holders of long-term debt of the Company are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. An agreement to furnish a copy of any such instruments upon request has been filed with the Securities and Exchange Commission.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		McDONALD’S CORPORATION         (Registrant)
		/s/ Ian F. Borden
Date:	May 4, 2023	Ian F. Borden
		Corporate Executive Vice President and Chief Financial Officer

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EX-10.Q

Exhibit 10(q)

McDONALD’S CORPORATION

AMENDED AND RESTATED 2012 OMNIBUS STOCK OWNERSHIP PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

EXECUTIVE OFFICERS

McDONALD’S CORPORATION (the “Company” or “McDonald’s”), hereby grants to the individual named in the chart below (the “Grantee”), the number of restricted stock units (“RSUs”) with respect to shares of the Company’s Stock set forth in the chart below. Each RSU represents the equivalent in value of one share of Stock. The RSUs shall vest upon satisfaction of performance and service conditions and/or in accordance with the termination provisions described below in this Performance-Based Restricted Stock Unit Award Agreement, including any Appendices (the “Agreement”). The RSUs shall be subject to the terms and conditions set forth in this Agreement and in the McDonald’s Corporation Amended and Restated 2012 Omnibus Stock Ownership Plan (the “Plan”).

The schedule of performance goals (“Performance Goals”) shall be established by the Committee not later than 90 days after the commencement of the Performance Period, provided that the outcome of the Performance Goals is substantially uncertain at the time the Committee establishes them. The schedule of Performance Goals shall be attached to this Agreement as Appendix A.

Capitalized terms not otherwise defined in this Agreement shall have the meaning provided in the Plan. The Plan is incorporated into, and made a part of, this Agreement.

Important Notice: To avoid cancellation of the RSUs, the Grantee must accept the RSUs on the terms and conditions on which they are offered, as set forth in this Agreement and in the Plan, by signing and returning this Agreement to the Corporate Executive Vice President – Chief People Officer, or her designee, no later than 60 days following the Grant Date specified in the chart below. If the Grantee fails to accept the RSUs in writing within this 60 day period, the RSUs will be cancelled.

The Grantee:
Target Number of RSUs (“Target Award”)
Grant Date:	February 13, 2023
Performance Period:	January 1, 2023 – December 31, 2025
Vesting Schedule: (other than on termination or change in control)	0% - 200% of the Target Award shall vest on the third anniversary of the Grant Date, as determined by achievement of the Performance Goals set forth in Appendix A.
Vesting Period	February 13, 2023 – February 14, 2026

1.Vesting of RSUs. As set forth in the chart above, if and to the extent the Performance Goals are achieved, the RSUs will vest on the third anniversary of the Grant Date (the “Vesting Date”), as long as the Grantee remains continuously employed by the Company or a Subsidiary until the Vesting Date, unless otherwise provided in Sections 5 or 10 below. The number of RSUs that shall vest will range from 0% to 200% of the Target Award, as determined by the extent to which the Performance Goals set forth in Appendix A to this Agreement are achieved. The Grantee will have no rights to the shares of Stock until the RSUs have vested. Prior to settlement, the RSUs represent an unfunded and unsecured obligation of the Company.

2.Settlement of RSUs. On the Vesting Date, or no later than 90 days thereafter, the Company will issue and deliver to the Grantee (at the Company’s sole discretion) either the number of shares of Stock equal to the number of vested RSUs or the cash equivalent value based on the New York Stock Exchange closing price of a share of Stock on the Vesting Date (or if the Vesting Date is a date on which the Stock is not traded, based on the closing price on the last date immediately preceding the Vesting Date on which the Stock was traded), subject to satisfaction of applicable tax and/or other obligations as described in Section 7 below and certification (in writing) by the Committee that the Performance Goals set forth in Appendix A have been attained. Notwithstanding the foregoing, (i) if the RSUs vest upon the Grantee’s Termination of Employment on account of death or Disability (within the meaning of Code Section 409A), the RSUs will be settled within 90 days of the Grantee’s Termination of Employment, and (ii) if the RSUs vest upon a Change in Control pursuant to Section 8(a) below, the RSUs will be settled as provided in Section 8(a) below, unless otherwise provided in Section 10 below. For purposes of the settlement timing provisions of this Section 2 and Sections 8 and 10 below, if the 60th or 90th day, as applicable, following the settlement event is not a business day, the vested RSUs will be settled on or prior to the business day immediately preceding the 60th or 90th day, as applicable.

3.Dividend Equivalents. Until such time as the RSUs vest in full, the Grantee shall be credited with an amount equal to all cash and stock dividends (whether ordinary or extraordinary) (“Dividend Equivalents”) that would have been paid to the Grantee if one share of Stock had been issued on the Grant Date for each RSU granted to the Grantee as set forth in this Agreement and that remains outstanding. In its discretion, the Company may reinvest any cash Dividend Equivalents into additional shares of Stock. Dividend Equivalents shall be subject to the same vesting restrictions, forfeiture and other conditions as the RSUs to which they are attributable and shall be paid, if at all, on the same date that the RSUs to which they are attributable are settled in accordance with Section 2 hereof. Dividend Equivalents that are held for the benefit of the Grantee shall be distributed in cash or in the discretion of the Company, in shares of Stock based on the closing price of a share of Stock on the Vesting Date.

4.Rights as a Stockholder. If the RSUs and any Dividend Equivalents are settled in shares of Stock, upon and following the date of such settlement, the Grantee shall be the record owner of the shares of Stock underlying the RSUs and any Dividend Equivalents unless and until such shares are sold or otherwise disposed of, and shall be entitled to all of the rights of a stockholder of the Company including the right to vote such shares and receive all dividends or other distributions paid with respect to such shares. Notwithstanding the foregoing, any dividends or other distributions shall be subject to the same restrictions, including transferability and vesting, as the underlying shares of Stock.

5.Termination of Employment. For purposes of this Section 5, the date of Termination of Employment will be the last date that the Grantee is classified as an employee in the payroll system of the Company or applicable Subsidiary, provided that in the case of a Grantee who is subject to U.S. federal income tax (a “U.S. Taxpayer”), the date of Termination of Employment will be the date that the Grantee experiences a “separation from service,” in accordance with the requirements of Code Section 409A. The Company shall have the exclusive discretion to determine when the Grantee is no longer employed for purposes of the RSUs and any Dividend Equivalents, this Agreement and the Plan. Subject to Section 8:

(a)    Termination within Four Months of the Grant Date. If the Grantee has a Termination of Employment for any reason other than (i) death or Disability or (ii) to work for a developmental licensee, prior to the four-month anniversary of the Grant Date, the RSUs and any Dividend Equivalents will be immediately forfeited.

(b)    Termination for Cause or Policy Violation. If the Grantee has a Termination of Employment for Cause, including on account of a Policy Violation (which means a termination resulting

2

from the commission of any act or acts which violate the Standards of Business Conduct of the Company or a Subsidiary or any successor thereto (including underlying polices or policies specifically referenced therein), as the same is effect and applicable to the Grantee at of the time of the Grantee’s violation), as determined by the Committee or its delegee in its sole and absolute discretion, the RSUs and any Dividend Equivalents will be immediately forfeited.

(c)    Termination on Account of Death or Disability. If the Grantee has a Termination of Employment on account of death or Disability (even during the first four months following the Grant Date), the Performance Goals requirement will be waived and 100% of the Target Award and any Dividend Equivalents will immediately vest upon such Termination of Employment (such date, if applicable, also a Vesting Date) and will be settled in accordance with Section 2 above, unless otherwise provided in Section 10(b) below.

For purposes of subsections (d) and (e) that follow, the term “Company Service” means the Grantee’s aggregate number of years of employment with the Company and any Subsidiary, including employment with any Subsidiary during the period before it became a Subsidiary.

(d)    Termination with At Least 68 Years of Combined Age and Service. If the Grantee voluntarily terminates employment and (i) the Grantee’s combined age and years of Company Service is equal to or greater than 68, (ii) the Grantee provides four months advance written notice of his or her intention to terminate employment to both Global Total Rewards (at US-Retirement@us.mcd.com) and the Grantee’s manager, (iii) the Grantee executes and delivers (and does not revoke) a release agreement satisfactory to the Company and (iv) the Grantee executes and delivers a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee or its delegee may require):

(i) In the event that Termination of Employment occurs on or after the four month anniversary of the Grant Date but prior to the 12 month anniversary of the Grant Date, 50% of the RSUs and their corresponding Dividend Equivalents shall be eligible for vesting to the extent the Performance Goals are achieved (and the remaining 50% and their corresponding dividend equivalents shall be forfeited); or

(ii) In the event that Termination of Employment occurs on or after the 12 month anniversary of the Grant Date, all of the RSUs and Dividend Equivalents shall be eligible for vesting to the extent the Performance Goals are achieved.

Settlement of the vested RSUs and Dividend Equivalents vesting pursuant to (i) or (ii) above will occur in accordance with Section 2 above, unless otherwise provided in Section 10(a) or (b) below. If the Grantee executes and delivers a non-competition agreement, and then violates the provisions of that agreement, the Company may seek to administratively or judicially enforce the covenants under the non-competition agreement and any failure to enforce that right does not waive that right.

(e)    Termination on Account of Special Circumstances or Disaffiliation of a Subsidiary. If the Grantee has a Termination of Employment due to Special Circumstances (which means, a Termination of Employment due to the Grantee becoming an owner-operator of a McDonald’s restaurant in connection with his or her Termination of Employment or a Termination of Employment by the Company or a Subsidiary without Cause) or a Disaffiliation of a Subsidiary (“Disaffiliation of a Subsidiary” means the Subsidiary’s ceasing to be a Subsidiary for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary)) and (i) in the case of a Termination of Employment due to Special Circumstances only, the Grantee’s combined age and years of Company Service is equal to or greater than 48, (ii) the Grantee

3

executes and delivers (and does not revoke) a release agreement satisfactory to the Company and (iii) the Grantee executes and delivers a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee or its delegee may require), a pro-rata portion of the RSUs and any Dividend Equivalents, as determined in accordance with Section 6 below, shall be eligible for vesting to the extent the Performance Goals are achieved. Settlement of any of such vested RSUs and Dividend Equivalents will occur in accordance with Section 2 above, unless otherwise provided in Section 10(a) or (b) below.

(f)    Termination with Company Approval to Work for a Developmental Licensee. If the Grantee has a Termination of Employment in order to work for a developmental licensee (even during the first four months following the Grant Date) and (i) the Company approves of the Grantee’s resignation, (ii) the Grantee executes and delivers (and does not revoke) a release agreement satisfactory to the Company and (iii) the Grantee executes and delivers a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee or its delegee may require), all of the RSUs and any Dividend Equivalents shall be eligible for vesting to the extent the Performance Goals are achieved. Settlement of any of such vested RSUs and Dividend Equivalents will occur in accordance with Section 2 above, unless otherwise provided in Section 10(a) or (b) below. If the Grantee executes and delivers a non-competition agreement, and then violates the provisions of that agreement, the Company may seek to administratively or judicially enforce the covenants under the non-competition agreement and any failure to enforce that right does not waive that right.

(g)    Any Other Reason. If the Grantee has a Termination of Employment for a reason other than those specified in Sections 5(a)-(f) above, all unvested RSUs and Dividend Equivalents shall be immediately forfeited.

(h)    Selection of Rule. If the Grantee’s Termination of Employment is covered by more than one of the foregoing rules, the applicable rule that is the most favorable to the Grantee shall apply, except that (i) in the case of a Termination of Employment as described in Section 5(a), Section 5(a) shall apply; (ii) in the case of a Termination of Employment as described in Section 5(b), Section 5(b) shall apply; and (iii) in the case of a Termination of Employment as described in Section 5(f), Section 5(f) shall apply.

6.Pro-Rata Vesting Formula. The number of RSUs and any related Dividend Equivalents that shall vest on a pro-rata basis as the result of the Grantee’s Termination of Employment in accordance with Section 5(e) above is the number of RSUs and Dividend Equivalents as applicable determined to have been earned based on achievement of the Performance Goals multiplied by the number of months (counting partial months as whole months) from the Grant Date through the date of the Grantee’s Termination of Employment, divided by the total number of months between the Grant Date and the Vesting Date, as is illustrated below:

Number of Earned RSUs and Dividend Equivalents x Number of Months Worked in Vesting Period

______________________________________________________________

Total Number of Months in Vesting Period (36 months)

Any fractional share amount determined upon application of the above formula will be rounded up to the next whole share.

7.Responsibility for Taxes.

(a)    Grantee’s Liability for Tax-Related Items. Except to the extent prohibited by law, the Grantee acknowledges that, regardless of any action the Company or, if different, the Grantee’s employer

4

(the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee or deemed by the Company or the Employer in their discretion to be an appropriate charge to the Grantee even if legally applicable to the Company or the Employer (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. The Grantee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs and any Dividend Equivalents, including the grant, vesting or settlement of the RSUs and any Dividend Equivalents, the subsequent sale of any shares of Stock acquired as a result of such settlement and/or the receipt of any dividends after settlement; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs and any Dividend Equivalents to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, the Grantee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)    Tax-Related Items Withholding Procedures. The Grantee authorizes the use of the withholding procedures set forth below in this subsection (b) to satisfy all Tax-Related Items obligations of the Company and/or the Employer that may arise upon the vesting of the RSUs and any Dividend Equivalents or any other taxable or tax withholding event. In the event that any amount of such Tax-Related Items cannot be satisfied by the means set forth in this subsection (b), the Grantee shall be required to pay such amount to the Company or the Employer. The Company shall not be required to issue or deliver the shares of Stock or the cash equivalent (if applicable) if the Grantee fails to comply with his or her obligations in connection with the Tax-Related Items. Further, the Company may withhold or account for Tax-Related Items by considering minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Grantee will receive a refund of any over-withheld amount in cash and will have no entitlement to the Stock equivalent.

(i)Stock Settlement. If the RSUs and any Dividend Equivalents are settled in shares of Stock and the Grantee is not subject to the short-swing profit rules of Section 16(b) of the 1934 Act, the Grantee authorizes the Company to satisfy the obligations with regard to all Tax-Related Items by withholding shares of Stock that would otherwise be issued upon settlement of the RSUs and any Dividend Equivalents. Alternatively, or in addition, the Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to Tax-Related Items by one or a combination of the following: (A) withholding from proceeds of the sale of shares of Stock acquired upon settlement of the RSUs and any Dividend Equivalents, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization); or (B) withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer. If the RSUs and any Dividend Equivalents are settled in shares of Stock and the Grantee is subject to the short-swing profit rules of Section 16(b) of the 1934 Act, the Company will withhold shares of Stock upon the relevant tax withholding event, unless the use of such withholding method is prevented by applicable law or has materially adverse accounting or tax consequences, in which case, the withholding obligation for any Tax-Related Items may be satisfied by one or a combination of methods (A) and (B) above.

If the obligation for Tax-Related Items is satisfied by withholding shares of Stock, for tax purposes, the Grantee is deemed to have been issued the full number of shares of Stock subject to the vested RSUs and Dividend Equivalents, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the applicable Tax-Related Items.

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(ii)Cash Settlement. If the RSUs and any Dividend Equivalents are settled in cash, the Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligation for Tax-Related Items by withholding from the cash amount paid to the Grantee in settlement of the RSUs and any Dividend Equivalents, or from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer.

8.Change in Control.

(a)    Treatment of RSUs and Dividend Equivalents Upon a Change in Control. In the event of a Change in Control, notwithstanding any other provision of this Agreement, the Performance Goals requirement will be waived and 100% of the Target Award and the related Dividend Equivalents will immediately vest upon such Change in Control (such date, if applicable, also a Vesting Date) and be settled at such time or within 60 days after the Change in Control if (i) after such Change in Control, the Stock ceases to be publicly-traded and (ii) the Grantee does not receive Replacement Awards with respect to the RSUs and any Dividend Equivalents. Notwithstanding the foregoing, if the Change in Control does not qualify as a change in control for purposes of Code Section 409A or if settlement upon such Change in Control would be prohibited under Code Section 409A, any RSUs and Dividend Equivalents held by a U.S. Taxpayer will be settled within 90 days following the earliest of (A) the Vesting Date or (B) the Grantee’s death.

(b)    Termination After Change in Control. If the immediate vesting described in the preceding paragraph does not apply, but the Company or a Subsidiary terminates the Grantee’s employment for any reason other than Cause within two years following the Change in Control, the Performance Goals requirement will be waived and 100% of the Target Award and the related Dividend Equivalents will immediately vest upon such Termination of Employment (such date, if applicable, also a Vesting Date) and will be settled within 90 days of Termination of Employment in accordance with Section 2 above, unless otherwise provided in Section 10(b) below. Notwithstanding the foregoing, if the Change in Control does not qualify as a change in control for purposes of Code Section 409A, any RSUs and Dividend Equivalents held by a U.S. Taxpayer will be settled within 90 days following the earliest of (A) the Vesting Date or (B) the Grantee’s death or “disability” within the meaning of Code Section 409A.

9.Settlement Upon Death of the Grantee. In any case under this Agreement in which the RSUs and any Dividend Equivalents are to be settled following the Grantee’s death, the shares of Stock or cash due in settlement of the RSUs and any Dividend Equivalents shall be issued to (i) the Grantee’s personal representative or the person to whom the RSUs and any Dividend Equivalents are transferred by will or the applicable laws of descent and distribution, (ii) the Grantee’s beneficiary designated in accordance with Section 8 of the Plan, or (iii) the then-acting trustee of the trust described in Section 8(b) of the Plan.

10.Code Section 409A.

(a)    Settlement Conditioned upon Termination Requirements. Notwithstanding any provision in this Agreement to the contrary (but except as provided in Section 10(b) hereof), in the event that (i) the vesting and settlement of RSUs and any Dividend Equivalents in connection with a Termination of Employment is conditioned on the Grantee’s execution and delivery of a release or a non-competition agreement and (ii) the settlement period commences in one calendar year and ends in the next calendar year (where the portion of the settlement period in the next calendar year contains at least one business day), the RSUs and any Dividend Equivalents held by a U.S. Taxpayer will be settled in the second calendar year.

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(b)    Specified Employee Termination of Employment. Notwithstanding any provision in this Agreement to the contrary, if the Grantee is a U.S. Taxpayer and a specified employee under the Company’s Specified Key Employee Policy (Grantees meeting both criteria are referred to herein as “Specified Employees”) on the date of the Grantee’s Termination of Employment, any settlement of the RSUs and any Dividend Equivalents that the Grantee is entitled to receive under this Agreement upon Termination of Employment will be made as follows:

(i)Settlement Due to Termination Pursuant to Section 5. If the Grantee’s Termination of Employment is covered by Section 5(c) through 5(f), the RSUs and any Dividend Equivalents will be settled within 90 days following the later of (A) the Vesting Date and (B) the date that is six months after the Grantee’s Termination of Employment; however, in the event of the Grantee’s death, then upon the date of the Grantee’s death..

(ii)Settlement Due to Termination After Change in Control. If the Grantee’s Termination of Employment is covered by Section 8(b), the RSUs and any Dividend Equivalents will be settled within 90 days following the later of (A) the Vesting Date and (B) the date that is six months after the Grantee’s Termination of Employment; however, in the event of the Grantee’s death, then upon the date of the Grantee’s death.

(c)    No Company Liability. All RSUs and any Dividend Equivalents granted hereunder are intended to be compliant with Code Section 409A, and this Agreement and the Plan shall be interpreted, construed and operated to reflect this intent. Notwithstanding the foregoing, this Agreement and the Plan may be amended at any time, without the consent of any party, to the extent that is necessary or desirable to satisfy any of the requirements under Code Section 409A, but the Company shall not be under any obligation to make any such amendment. Nothing in this Agreement or the Plan shall provide a basis for any person to take action against the Company or any Subsidiary based on matters covered by Code Section 409A, including the tax treatment of any amount paid or RSUs and any Dividend Equivalents granted under this Agreement, and neither the Company nor any of its Subsidiaries shall under any circumstances have any liability to the Grantee or his or her estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Code Section 409A.

11.Repayment/Forfeiture.

(a)    Compliance with Applicable Law and/or Company Clawback Policy. Any benefits the Grantee may receive hereunder shall be subject to repayment or forfeiture as may be required to comply with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder, (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to the Grantee.

(b)    Detrimental Conduct. Any RSUs and any Dividend Equivalents granted pursuant to this Agreement and the Plan are intended to align the Grantee’s long-term interests with the long-term interests of the Company. If the Company determines that the Grantee has (i) engaged in willful fraud that causes harm to the Company or any of its Subsidiaries or that is intended to manipulate the Performance Goals, either during employment with the Company or after such employment terminates for any reason or (ii) violated the provisions of a non-competition agreement (any such act shall be referred to as “Detrimental Conduct”), the Grantee shall be deemed to have acted contrary to the long-term interests of the Company. Accordingly, the following rules shall apply:

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(i)In the event that the Company determines, in its sole and absolute discretion, that the Grantee engaged in Detrimental Conduct, the Company may, in its sole and absolute discretion, (A) terminate such Grantee’s participation in the Plan and/or (B) send a notice of recapture (a “Recapture Notice”) that (1) cancels all or a portion of any future-vesting or settling RSUs and Dividend Equivalents, (2) requires the return of any cash or shares of Stock received at settlement upon or after vesting of the RSUs and any Dividend Equivalents and/or (3) requires the reimbursement to the Company of any net proceeds received from the sale of any shares of Stock acquired as a result of such settlement and/or the receipt of any dividends after settlement.

(ii)The Company has sole and absolute discretion to take action or not to take action pursuant to this Section 11 upon determination of Detrimental Conduct, and its decision not to take action in any particular instance shall not in any way limit its authority to send a Recapture Notice in any other instance.

(iii)Upon vesting of any RSUs and Dividend Equivalents, the Grantee shall, if requested by the Company, certify on a form acceptable to the Company, that he or she is not, and has not previously been, engaged in Detrimental Conduct.

(iv)Notwithstanding any provision of this Section 11, if any provision of this Section 11 is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law; provided, that this Section 11 shall not apply in any manner to individuals subject to the laws of France.

(v)Any action taken by the Company pursuant to this Section 11 is without prejudice to any other action the Company, or any of its Subsidiaries, may choose to take upon determination that the Grantee has engaged in Detrimental Conduct.

(vi)This Section 11 will cease to apply after a Change in Control.

12.No Employment or Service Contract. Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in the employ of the Company or any Subsidiary for any period of specific duration or interfere with or restrict in any way the right of the Company or any Subsidiary, which is hereby expressly reserved, to remove, terminate or discharge the Grantee at any time for any reason whatsoever, with or without Cause and with or without advance notice.

13.Governing Law and Choice of Venue. The RSUs and any Dividend Equivalents are governed by, and subject to, United States federal and Illinois state law (without regard to the conflict of law provisions) and the requirements of the New York Stock Exchange as well as the terms and conditions set forth in the Plan and this Agreement. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the RSUs and any Dividend Equivalents or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Illinois, agree that such litigation shall be conducted in the courts of DuPage County, Illinois, or the federal courts for the United States for the Northern District of Illinois, where this grant is made and/or to be performed.

14.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means and/or require the Grantee to accept this grant of RSUs and any Dividend Equivalents or any future restricted stock unit grant by electronic means. The Grantee hereby consents to receive such documents by

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electronic delivery and, if required by the Company, agrees to accept this grant and any future grant of RSUs and any Dividend Equivalents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

15.Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

16.Waiver. The waiver by the Company with respect to compliance of any provision of this Agreement by the Grantee shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of such party of a provision of this Agreement.

17.Headings. The headings in this Agreement have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions of this Agreement.

18.Appendices. The Appendices constitute part of this Agreement. Notwithstanding the provisions in this Agreement, the RSUs and any Dividend Equivalents shall be subject to any special terms and conditions set forth in the Appendices to this Agreement.

19.Entire Agreement. This Agreement and the Plan reflect the exclusive agreement between the parties regarding the subject matter herein and supersedes any prior understandings or agreements, whether oral or written, in respect of such subject matter.

BY ACCEPTING THE RSUs, THE GRANTEE AGREES TO THE TERMS OF THIS AGREEMENT AND THE PLAN.

BY: ________________________________

PRINT NAME: _______________________

DATE: ______________________________

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EX-10.R

Exhibit 10(r)

McDONALD’S CORPORATION

AMENDED AND RESTATED 2012 OMNIBUS STOCK OWNERSHIP PLAN

STOCK OPTION AWARD AGREEMENT

EXECUTIVE OFFICERS

McDONALD’S CORPORATION (the “Company” or “McDonald’s”), hereby grants to the individual named in the chart below (the “Optionee”), the number of options to purchase shares of the Company’s Stock (the “Options”) for the Option Price per share (the “Option Price”), both as set forth in the chart below. These Options shall vest and terminate according to the vesting schedule and termination provisions described below in this Stock Option Award Agreement, including any Appendices (together, the “Agreement”). The Options shall be subject to the terms and conditions set forth in this Agreement and in the McDonald’s Corporation Amended and Restated 2012 Omnibus Stock Ownership Plan (the “Plan”).

Capitalized terms not otherwise defined in this Agreement shall have the meaning provided in the Plan. The Plan is incorporated into, and made a part of, this Agreement.

Optionee:
Number of Options:
Type of Option Grant:	Non-Qualified Stock Option
Option Price:	$XXX.XX
Grant Date	February 13, 2023
Expiration Date:	10th Anniversary of the Grant Date
Vesting Schedule: (as long as the Optionee remains continuously employed by the Company or a Subsidiary until the applicable vesting date, except as otherwise set forth in this Agreement):	25% on first anniversary of Grant Date 25% on second anniversary of Grant Date 25% on third anniversary of Grant Date 25% on fourth anniversary of Grant Date

1.Termination of Employment. For purposes of this Section 1, the date of Termination of Employment will be the last date that the Optionee is classified as a current employee in the payroll system of the Company or applicable Subsidiary, provided that in the case of a Optionee who is subject to U.S. federal income tax (a “U.S. Taxpayer”), the date of Termination of Employment will be the date that the Optionee experiences a “separation from service,” in accordance with the requirements of Code Section 409A. The Committee shall have the exclusive discretion to determine when the Optionee is no longer employed for purposes of the Options, this Agreement and the Plan.

(a)Termination Within Four Months of the Grant Date. If the Optionee has a Termination of Employment for any reason other than (i) death or Disability or (ii) to work for a developmental licensee, prior to the four-month anniversary of the Grant Date, all Options will be immediately forfeited.

(b)Termination for Cause. If the Optionee has a Termination of Employment for Cause, all vested and unvested Options shall terminate immediately; provided, however, that if the Optionee has a Termination of Employment for Cause due solely to a Policy Violation (which means a termination resulting from the commission of any act or acts which violate the Standards of Business Conduct of the Company or a Subsidiary or any successor thereto (including underlying policies or policies specifically referenced therein), as the same is in effect and applicable to the Optionee at the time of the Optionee’s violation), the provisions of subsection 1(c) below shall apply.

(c)Termination Due to Policy Violation. If the Optionee has a Termination of Employment for Cause due solely to a Policy Violation (as determined by the Committee in its sole and absolute discretion), any Options exercisable on the date of the Optionee’s Termination of Employment may be exercised not later than the 90th day following the Optionee’s Termination of Employment (but not beyond the Expiration Date). Any unvested Options shall be forfeited as of the date of the Optionee’s Termination of Employment.

(d)Termination on Account of Death or Disability. If the Optionee has a Termination of Employment on account of death or Disability (even during the first four months following the Grant Date), any unexercised Options, whether or not vested on the date of the Optionee’s Termination of Employment, may be exercised at any time within three years after such Termination of Employment (but not beyond the Expiration Date); and in the case of death, the Options may be exercised by (i) the Optionee’s personal representative or by the person to whom the Options are transferred by will or the applicable laws of descent and distribution or (ii) the Optionee’s beneficiary designated in accordance with Section 8 of the Plan.

For purposes of subsections (e) and (f) that follow, the term “Company Service” means the Optionee’s aggregate number of years of employment with the Company and any Subsidiary, including employment with any Subsidiary during the period before it became a Subsidiary.

(e)Termination with At Least 68 Years of Combined Age and Service. If the Optionee voluntarily terminates employment and (i) the Optionee’s combined age and years of Company Service is equal to or greater than 68, (ii) the Optionee provides four months advance written notice of his or her intention to terminate employment to both Global Total Rewards (at US-Retirement@us.mcd.com) and the Optionee’s manager, (iii) the Optionee executes and delivers (and does not revoke) a release agreement satisfactory to the Company and (iv) the Optionee executes and delivers a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee may require):

(i)In the event that Termination of Employment occurs on or after the four month anniversary of the Grant Date but prior to the 12 month anniversary of the Grant Date, 50% of the Options shall continue to vest in accordance with the Vesting Schedule set forth above and any exercisable options may be exercised at any time prior to and including the Expiration Date (and the remaining 50% shall be forfeited); or

(ii)In the event that Termination of Employment occurs on or after the 12 month anniversary of the Grant Date, any Options that are vested on the date of the Optionee’s Termination of Employment or that would have vested within three years following such Termination of Employment shall vest in accordance with the Vesting Schedule set forth above in this Agreement and any exercisable options may be exercised at any time prior to and including the Expiration Date.

If the Optionee executes and delivers a non-competition agreement, and then violates the provisions of that agreement (in the Committee’s discretion), all unexercised Options will immediately terminate and will not be exercisable.

(f)Termination on Account of Special Circumstances. If the Optionee has a Termination of Employment due to Special Circumstances (which means, a Termination of Employment due to the Optionee becoming an owner-operator of a McDonald’s restaurant in connection with his or her Termination of Employment or a Termination of Employment by the Company or a Subsidiary without Cause, in each case, where the Optionee’s combined age and years of Company Service meets the threshold set forth in the chart below and the Optionee satisfies the additional conditions set forth in subsections (i) and (ii) below, as applicable), the Options, to the extent unvested as of the date of the Optionee’s Termination of Employment, will, for the applicable period after the Optionee’s Termination

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of Employment specified in the chart below, become vested in accordance with the Vesting Schedule set forth above in this Agreement and any vested Options may be exercised at any time within the applicable period specified in the chart below after such Termination of Employment (but not beyond the Expiration Date). As of the expiry of the applicable period specified in the chart below after the Optionee’s Termination of Employment, any Options that remain unvested will be forfeited.

Age and Years of Company Service	Additional Vesting and Time to Exercise
68 plus years	3 Years
58 to 67 years	2 Years
48 to 57 years	1 Year

(i)Termination of Employment Without Cause. In the case of the Optionee’s Termination of Employment by the Company or a Subsidiary without Cause, to qualify for the treatment provided in this subsection (f), the Optionee must execute and deliver (i) a release agreement satisfactory to the Company (which the Optionee does not revoke) and (ii) a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee or its delegee may require). If the Optionee executes and delivers a non-competition agreement, and then violates the provisions of that agreement (in the Committee’s discretion), all unexercised Options will immediately terminate and will not be exercisable.

(ii)Termination due to Change in Status to Owner-Operator. If the Optionee becomes an owner-operator of a McDonald’s restaurant in connection with his or her Termination of Employment, to qualify for the above treatment, the Optionee must execute and deliver (and not revoke) a release agreement satisfactory to the Company.

(g)Termination with Company Approval to Work for a Developmental Licensee.If the Optionee has a Termination of Employment in order to work for a developmental licensee (even during the first four months following the Grant Date) and (i) the Company approves of the Optionee’s resignation, (ii) the Optionee executes and delivers (and does not revoke) a release agreement satisfactory to the Company and (iii) the Optionee executes and delivers a non-competition agreement covering a period of 18 months in a form satisfactory to the Company as permitted by applicable law (as the Committee or its delegee may require), any unvested Options shall continue to vest in accordance with the Vesting Schedule set forth above in this Agreement, and any exercisable Options may be exercised at any time prior to and including the Expiration Date.If the Optionee executes and delivers a non-competition agreement, and then violates the provisions of that agreement (in the Committee’s discretion), all unexercised Options will immediately terminate and will not be exercisable.

(h)Termination Due to Disaffiliation of a Subsidiary. If the Optionee has a Termination of Employment because of a Disaffiliation of a Subsidiary and the Optionee executes and delivers (and does not revoke) a release agreement satisfactory to the Company, Options that are either vested on the date of the Optionee’s Termination of Employment or that would have vested within one year of the Optionee’s Termination of Employment may be exercised at any time within one year following such Termination of Employment (but not beyond the Expiration Date). All other unvested Options shall be forfeited as of the date of Termination of Employment. If, however, the Options are assumed by another entity, this rule will not apply and the Options will continue in effect, subject to any changes as may be made to reflect the assumption of the Options. For purposes of this Agreement, “Disaffiliation of a Subsidiary” means the Subsidiary’s ceasing to be a Subsidiary for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock or all of the assets of the Subsidiary).

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(i)Any Other Reason. If the Optionee has a Termination of Employment for a reason other than those specified in Sections 1(a)-(h) above, any Options vested on the date of the Optionee’s Termination of Employment may be exercised not later than the 90th day following the Optionee’s Termination of Employment (but not beyond the Expiration Date). All unvested Options shall be forfeited as of the date of Termination of Employment.

(j)Selection of Rule. If the Optionee’s Termination of Employment is covered by more than one of the foregoing rules, the applicable rule that is the most favorable to the Optionee shall apply, except that (i) in the case of a Termination of Employment as described in Section 1(a) above, Section 1(a) shall apply; (ii) in the case of a Termination of Employment for Cause, the Committee shall have the sole and absolute discretion to determine whether the Optionee is eligible for the treatment described in Section 1(c) above; (iii) in the case of a Termination of Employment with Company approval to work for a developmental licensee, Section 1(g) shall apply; and (iv) in the case of a Termination of Employment due to Disaffiliation of a Subsidiary, Section 1(h) shall apply.

2.Responsibility for Taxes. Except to the extent prohibited by law, the Optionee acknowledges that, regardless of any action the Company or, if different, the Optionee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee or deemed by the Company or the Employer in their discretion to be an appropriate charge to the Optionee even if legally applicable to the Company or the Employer (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Options, including the grant, vesting or exercise of the Options, the subsequent sale of shares of Stock acquired as a result of such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Options to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

The Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of shares of Stock acquired at exercise of the Options, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization). The Company may withhold or account for Tax-Related Items by considering minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the Stock equivalent. The Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver shares of Stock or the proceeds of the sale of shares of Stock if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

3.Repayment/Forfeiture.

(a)Compliance with Applicable Law and/or Company Clawback Policy. Any benefits the Optionee may receive hereunder shall be subject to repayment or forfeiture as may be required to comply

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with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder, (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to the Optionee.

(a)Detrimental Conduct. Any Options granted pursuant to this Agreement and the Plan are intended to align the Optionee’s long-term interests with the long-term interests of the Company. If the Company determines that the Optionee has (i) engaged in willful fraud that causes harm to the Company or any of its Subsidiaries, either during employment with the Company or after such employment terminates for any reason or (ii) violated the provisions of a non-competition agreement (any such act, “Detrimental Conduct”) the Optionee shall be deemed to have acted contrary to the long-term interests of the Company. Accordingly, the following rules shall apply:

(i)In the event that the Company determines, in its sole and absolute discretion, that the Optionee engaged in Detrimental Conduct, the Company may, in its sole and absolute discretion, (A) terminate such Optionee’s participation in the Plan and/or (B) send a notice of recapture (a “Recapture Notice”) that (1) cancels all or a portion of any future-vesting Options, (2) requires the return of any shares of Stock received upon exercise of the Options and/or (3) requires the reimbursement to the Company of any net proceeds received from the sale of any shares of Stock acquired as a result of such exercise.

(ii)The Company has sole and absolute discretion to take action or not to take action pursuant to this Section 3 upon determination of Detrimental Conduct, and its decision not to take action in any particular instance shall not in any way limit its authority to send a Recapture Notice in any other instance.

(iii)Upon vesting of any Options, the Optionee shall, if requested by the Company, certify on a form acceptable to the Company, that he or she is not, and has not previously been, engaged in Detrimental Conduct.

(iv)Notwithstanding any provision of this Section 3, if any provision of this Section 3 is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law; provided, that this Section 3 shall not apply in any manner to individuals subject to the laws of France.

(v)Any action taken by the Company pursuant to this Section 3 is without prejudice to any other action the Company, or any of its Subsidiaries, may choose to take upon determination that the Optionee has engaged in Detrimental Conduct.

(vi)This Section 3 will cease to apply after a Change in Control.

4.No Employment or Service Contract. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary for any period of specific duration or interfere with or restrict in any way the right of the Company or any Subsidiary, which is hereby expressly reserved, to remove, terminate or discharge the Optionee at any time for any reason whatsoever, with or without Cause and with or without advance notice.

5.Governing Law and Choice of Venue. The Options are governed by, and subject to, United States federal and Illinois state law (without regard to the conflict of law provisions) and the

5

requirements of the New York Stock Exchange as well as the terms and conditions set forth in the Plan and this Agreement. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Options or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Illinois, agree that such litigation shall be conducted in the courts of DuPage County, Illinois, or the federal courts for the United States for the Northern District of Illinois, where this grant is made and/or to be performed.

6.Electronic Delivery and Acceptance. The Company may, in its sole and absolute discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means and/or require the Optionee to accept these Options or any future option grant by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to accept these Options and any future option grant through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

7.Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

8.Waiver. The waiver by the Company with respect to compliance of any provision of this Agreement by the Optionee shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of such party of any provision of this Agreement.

9.Headings. The headings in this Agreement have been inserted for convenience of reference only, and are to be disregarded in any construction of the provisions of this Agreement.

10.Appendices. The Appendices constitute part of this Agreement. Notwithstanding the provisions in this Agreement, the Options shall be subject to any special terms and conditions set forth in the Appendices to this Agreement.

11.Entire Agreement. This Agreement and the Plan reflect the exclusive agreement between the parties regarding the subject matter herein and supersedes any prior understandings or agreements, whether oral or written, in respect of such subject matter.

BY ACCEPTING THE OPTIONS, THE OPTIONEE AGREES TO THE TERMS OF THIS AGREEMENT AND THE PLAN.

BY: ________________________________

PRINT NAME: _______________________

DATE: ______________________________

6

EX-31.1

Exhibit 31.1

Rule 13a-14(a) Certification of Chief Executive Officer

I, Christopher J. Kempczinski, certify that:

(1)I have reviewed this quarterly report on Form 10-Q of McDonald’s Corporation;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Christopher J. Kempczinski

Christopher J. Kempczinski

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a) Certification of Chief Financial Officer

I, Ian F. Borden, certify that:

(1)I have reviewed this quarterly report on Form 10-Q of McDonald’s Corporation;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Ian F. Borden

Ian F. Borden

Corporate Executive Vice President and
Chief Financial Officer

EX-32.1

Exhibit 32.1

18 U.S.C. 1350 Certification of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of McDonald’s Corporation (the “Company”), does hereby certify, to such officer’s knowledge, that the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2023

/s/ Christopher J. Kempczinski

Christopher J. Kempczinski

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

18 U.S.C. 1350 Certification of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of McDonald’s Corporation (the “Company”), does hereby certify, to such officer’s knowledge, that the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2023

/s/ Ian F. Borden

Ian F. Borden

Corporate Executive Vice President and
Chief Financial Officer

XML

Cover	3 Months Ended
	Mar. 31, 2023 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	1-5231
Entity Registrant Name	McDONALD’S CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-2361282
Entity Address, Address Line One	110 North Carpenter Street
Entity Address, City or Town	Chicago,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60607
City Area Code	630
Local Phone Number	623-3000
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	MCD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	730,093,896
Document Fiscal Period Focus	Q1
Amendment Flag	false
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0000063908

XML

Condensed Consolidated Balance Sheet - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Current assets
Cash and equivalents	$ 3,708.1	$ 2,583.8
Accounts and notes receivable	2,075.5	2,115.0
Inventories, at cost, not in excess of market	51.5	52.0
Prepaid expenses and other current assets	963.6	673.4
Total current assets	6,798.7	5,424.2
Other assets
Investments in and advances to affiliates	1,087.6	1,064.5
Goodwill	2,930.6	2,900.4
Miscellaneous	4,794.8	4,707.2
Total other assets	8,813.0	8,672.1
Lease right-of-use asset, net	12,544.2	12,565.7
Property and equipment
Property and equipment, at cost	41,487.1	41,037.6
Accumulated depreciation and amortization	(17,628.6)	(17,264.0)
Net property and equipment	23,858.5	23,773.6
Total assets	52,014.4	50,435.6
Current liabilities
Short-term borrowings and current maturities of long-term debt	524.2	0.0
Accounts payable	811.8	980.2
Lease liability	668.7	661.1
Income taxes	795.8	274.9
Other taxes	273.0	255.1
Accrued interest	364.6	393.4
Accrued payroll and other liabilities	1,186.6	1,237.4
Total current liabilities	4,624.7	3,802.1
Long-term debt	36,603.7	35,903.5
Long-term lease liability	12,122.6	12,134.4
Long-term income taxes	737.1	791.9
Deferred revenues - initial franchise fees	760.5	757.8
Other long-term liabilities	1,059.4	1,051.8
Deferred income taxes	1,882.5	1,997.5
Shareholders' equity (deficit)
Preferred stock, no par value; authorized—165.0 million shares; issued—none	0.0	0.0
Common stock, $0.01 par value; authorized—3.5 billion shares; issued—1,660.6 million shares	16.6	16.6
Additional paid-in capital	8,635.5	8,547.1
Retained earnings	60,235.0	59,543.9
Accumulated other comprehensive income (loss)	(2,489.4)	(2,486.6)
Common stock in treasury, at cost; 928.2 and 915.8 million shares	(72,173.8)	(71,624.4)
Total shareholders' equity (deficit)	(5,776.1)	(6,003.4)
Total liabilities and shareholders' equity (deficit)	$ 52,014.4	$ 50,435.6

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Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred Stock, Par or Stated Value Per Share	$ 0	$ 0
Preferred stock, authorized	165,000,000.0	165,000,000.0
Preferred stock, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	3,500,000,000	3,500,000,000
Common stock, issued	1,660,600,000	1,660,600,000
Common stock in treasury, shares	930,500,000	929,300,000
Short-term borrowings and current maturities of long-term debt	$ 524.2	$ 0.0

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Condensed Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues
Sales by Company-operated restaurants	$ 2,224.3	$ 2,302.4
Revenues from franchised restaurants	3,587.5	3,262.8
Other Revenues	86.0	100.4
Total revenues	5,897.8	5,665.6
Operating costs and expenses
Company-operated restaurant expenses	1,923.1	1,959.2
Franchised restaurants-occupancy expenses	598.3	584.0
Other Restaurant Expenses	62.8	72.3
Selling, general & administrative expenses
Depreciation and Amortization	99.3	92.7
Other Selling, General and Administrative Expense	553.3	584.3
Other operating (income) expense, net	128.6	60.5
Total operating costs and expenses	3,365.4	3,353.0
Operating income	2,532.4	2,312.6
Interest expense	329.7	287.3
Nonoperating (income) expense, net	(64.3)	484.1
Income before provision for income taxes	2,267.0	1,541.2
Provision for income taxes	464.7	436.8
Net income	$ 1,802.3	$ 1,104.4
Earnings per common share-basic	$ 2.47	$ 1.49
Earnings per common share-diluted	2.45	1.48
Dividends declared per common share	$ 1.52	$ 1.38
Weighted average shares outstanding-basic	730.9	742.6
Weighted average shares outstanding-diluted	735.5	747.6

XML

Condensed Consolidated Statement of Comprehensive Income - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 1,802,300,000	$ 1,104,400,000
Foreign currency translation adjustments:
Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges	15,000,000.0	(84,200,000)
Reclassification of (gain) loss to net income	0	0
Foreign currency translation adjustments-net of tax benefit (expense) of ($66.1), $116.8, ($133.7) and $67.6	15,000,000.0	(84,200,000)
Cash flow hedges:
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	(8,500,000)	27,400,000
Reclassification of (gain) loss to net income	(8,200,000)	(10,100,000)
Cash flow hedges-net of tax benefit (expense) of (24.3), (3.7), (29.3) and (14.9)	(16,700,000)	17,300,000
Defined benefit pension plans:
Gain (loss) recognized in AOCI	8,400,000	100,000
Reclassification of (gain) loss to net income	(9,500,000)	(1,400,000)
Defined benefit pension plans-net of tax benefit (expense) of $0.0, $0.0, $0.1 and $0.5	(1,100,000)	(1,300,000)
Total other comprehensive income (loss), net of tax	(2,800,000)	(68,200,000)
Comprehensive income (loss)	$ 1,799,500,000	$ 1,036,200,000

XML

Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax	$ 4,500,000	$ (5,000,000.0)
Other comprehensive income (loss), pension and other postretirement benefit plans, tax	1,100,000	0.0
Other comprehensive income (loss), foreign currency translation adjustment, tax	$ 35,600,000	$ (59,000,000.0)

XML

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net income	$ 1,802.3	$ 1,104.4
Charges and credits:
Depreciation and amortization	490.5	479.7
Deferred income taxes	(86.1)	(50.5)
Share-based compensation	49.7	54.3
Other	(30.8)	72.0
Changes in working capital items	195.1	473.4
Cash provided by (used for) operations	2,420.7	2,133.3
Investing activities
Capital expenditures	(503.3)	(401.2)
Purchases of restaurant businesses	(97.6)	(86.7)
Sales of restaurant businesses	20.8	16.5
Sales of property	18.0	4.9
Other	(179.2)	(88.0)
Cash used for investing activities	(741.3)	(554.5)
Financing activities
Net short-term borrowings	12.8	6.0
Long-term financing issuances	1,054.3	0.0
Long-term financing repayments	0.0	(1,350.6)
Treasury stock purchases	(578.4)	(1,506.5)
Common stock dividends	(1,111.2)	(1,025.1)
Proceeds from stock option exercises	73.8	58.7
Other	(9.7)	(12.6)
Cash provided by (used for) financing activities	(558.4)	(3,830.1)
Effect of exchange rates on cash and cash equivalents	3.3	(122.2)
Cash and equivalents increase (decrease)	1,124.3	(2,373.5)
Cash and equivalents at beginning of period	2,583.8	4,709.2
Cash and equivalents at end of period	$ 3,708.1	$ 2,335.7

XML

Condensed Consolidated Statement of Shareholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common stock issued	Additional paid-in capital	Retained earnings	Pensions	Cash flow hedges	Foreign currency translation	Common stock in treasury
Beginning balance (in shares) at Dec. 31, 2021		1,660.6						915.8
Beginning balance at Dec. 31, 2021	$ (4,601.0)	$ 16.6	$ 8,231.6	$ 57,534.7	$ (179.5)	$ (24.8)	$ (2,369.4)	$ (67,810.2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,104.4			1,104.4
Other Comprehensive Income (Loss), Net of Tax	(68.2)				(1.3)	17.3	(84.2)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	1,036.2
Common stock cash dividends	(1,025.1)			(1,025.1)
Treasury stock purchases (in shares)								(6.1)
Treasury Stock, Value, Acquired, Cost Method	(1,506.5)							$ (1,506.5)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	54.3		54.3
Stock option exercises and other (in shares)								0.8
Stock Issued During Period, Value, Stock Options Exercised	51.3		21.2					$ 30.1
Ending balance (in shares) at Mar. 31, 2022		1,660.6						921.1
Ending balance at Mar. 31, 2022	(5,990.8)	$ 16.6	8,307.1	57,614.0	(180.8)	(7.5)	(2,453.6)	$ (69,286.6)
Beginning balance (in shares) at Dec. 31, 2022		1,660.6						929.3
Beginning balance at Dec. 31, 2022	(6,003.4)	$ 16.6	8,547.1	59,543.9	(298.2)	30.7	(2,219.1)	$ (71,624.4)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,802.3			1,802.3
Other Comprehensive Income (Loss), Net of Tax	(2.8)				(1.1)	(16.7)	15.0
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	1,799.5
Common stock cash dividends	(1,111.2)			(1,111.2)
Treasury stock purchases (in shares)								(2.2)
Treasury Stock, Value, Acquired, Cost Method	(584.5)							$ (584.5)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	49.7		49.7
Stock option exercises and other (in shares)								1.0
Stock Issued During Period, Value, Stock Options Exercised	73.8		38.7					$ 35.1
Ending balance (in shares) at Mar. 31, 2023		1,660.6						930.5
Ending balance at Mar. 31, 2023	$ (5,776.1)	$ 16.6	$ 8,635.5	$ 60,235.0	$ (299.3)	$ 14.0	$ (2,204.1)	$ (72,173.8)

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Condensed Consolidated Statement of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Common stock cash dividends (in dollars per share)	$ 1.52	$ 1.38

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Basis of Presentation

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers, are referred to herein as the "System."

Basis of Presentation

The accompanying condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2022 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter ended March 31, 2023 do not necessarily indicate the results that may be expected for the full year.

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Restaurant Information

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Restaurant Information

Restaurant Information

The following table presents restaurant information by ownership type:

Restaurants at March 31,	2023	2022
Conventional franchised	21,701	21,558
Developmental licensed	8,289	7,981
Foreign affiliated	8,427	8,013
Total Franchised	38,417	37,552
Company-operated	2,118	2,792
Total Systemwide restaurants	40,535	40,344

Restaurant information reflects the sale of over 850 restaurants in conjunction with the exit of our business in Russia in the second quarter of 2022, most of which were Company-operated.

The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the accompanying condensed consolidated financial statements for the periods prior to purchase and sale.

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Per Common Share Information	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Per Common Share Information	Per Common Share InformationDiluted earnings per common share is calculated as net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 4.6 million shares and 5.0 million shares for the quarters 2023 and 2022, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 2.3 million shares and 1.7 million shares for the quarters 2023 and 2022, respectively.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023 that are of significance or potential significance to the Company.

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Restructuring

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring

Accelerating the Organization

In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy include the addition of Restaurant Development to the Company’s growth pillars and an internal effort to modernize ways of working, Accelerating the Organization, both of which are aimed at elevating the Company’s performance. Accelerating the Organization is designed to unlock further growth as the Company modernizes the way it works by focusing on becoming faster, more innovative and more efficient at solving problems for its customers and people.

The Company expects to incur between $200 million and $250 million of expenses related to this strategic initiative in 2023, of which $180 million was incurred in the three months ended March 31, 2023. These expenses were recorded in the Other operating (income) expense, net line within the consolidated statement of income. Restructuring expenses primarily consist of employee termination benefits, costs to terminate contracts, including lease terminations, and professional services and other costs. Professional services and other costs primarily relate to expenses incurred for legal and consulting activities. There were no significant non-cash impairment charges included in the amounts listed in the table below.

The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions):

	Employee Termination Benefits		Costs to Terminate Contracts		Other Related Costs		Total
2023
Beginning Balance	$	—	$	—	$	—	$	—
Restructuring Costs Incurred	110.3		26.9		43.3		180.5
Cash Payments	(1.5)		(1.4)		(0.3)		(3.2)
Other Non-Cash Items	—		—		(14.1)		(14.1)
Accrued Balance at End of Period	$	108.8	$	25.5	$	28.9	$	163.2

Of the $180 million of restructuring costs incurred in the three months ended March 31, 2023, $58 million was recorded in the U.S., $71 million was recorded in the International Operated Markets segment and $51 million was recorded in the International Developmental Licensed Markets & Corporate segment, the majority of which was recorded at Corporate.

Substantially all of the accrued restructuring balance recorded at March 31, 2023, related to the Company’s Accelerating the Organization initiative, is expected to be paid out by the end of 2023.

As part of Accelerating the Organization, the Company is also in the initial stages of developing a strategy that will utilize an enterprise-wide Global Business Services model to deliver business services at scale with greater efficiency. Additional costs will be incurred as the strategy progresses; however, at this point in time these future costs cannot be estimated. The expectation is that the Company will complete the majority of its Global Business Services strategy by the end of 2027.

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Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Tax Disclosure

Income Taxes

The effective income tax rate was 20.5% and 28.3% for the quarters ended March 31, 2023 and 2022, respectively. The tax rate for the quarter ended March 31, 2022 was impacted by the non-deductibility for tax purposes of $500 million of nonoperating expense related to a tax audit in France. Excluding the impacts of the $500 million of nonoperating expense, current year restructuring charges related to Accelerating the Organization and prior year charges, primarily related to Russia, the effective income tax rate was 20.9% and 21.3% for the quarters ended March 31, 2023 and 2022, respectively.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs. There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2022 Annual Report on Form 10-K.

At March 31, 2023, the fair value of the Company’s debt obligations was estimated at $35.6 billion, compared to a carrying amount of $37.1 billion. The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value.

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Financial Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments and Hedging Activities

Financial Instruments and Hedging Activities

The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes.

The following table presents the fair values of derivative instruments included on the condensed consolidated balance sheet:

	Derivative Assets					Derivative Liabilities
In millions	Balance Sheet Classification	March 31, 2023		December 31, 2022		Balance Sheet Classification	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Foreign currency	Prepaid expenses and other current assets	$	39.9	$	53.3	Accrued payroll and other liabilities	$	(23.0)	$	(17.9)
Interest rate	Prepaid expenses and other current assets	—		—		Accrued payroll and other liabilities	(1.5)		—
Foreign currency	Miscellaneous other assets	32.3		28.7		Other long-term liabilities	(27.6)		(30.7)
Interest rate	Miscellaneous other assets	—		—		Other long-term liabilities	(79.0)		(91.5)
Total derivatives designated as hedging instruments		$	72.2	$	82.0		$	(131.1)	$	(140.1)
Derivatives not designated as hedging instruments
Equity	Prepaid expenses and other current assets	$	219.3	$	200.5	Accrued payroll and other liabilities	$	(0.1)	$	(1.6)
Foreign currency	Prepaid expenses and other current assets	0.6		—		Accrued payroll and other liabilities	—		—
Equity	Miscellaneous other assets	—		—
Total derivatives not designated as hedging instruments		$	219.9	$	200.5		$	(0.1)	$	(1.6)
Total derivatives		$	292.1	$	282.5		$	(131.2)	$	(141.7)

    The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2023 and 2022, respectively:

	Location of gain or loss recognized in income on derivative	Gain (loss) recognized in AOCI				Gain (loss) reclassified into income from AOCI				Gain (loss) recognized in income on derivative
In millions		2023		2022		2023		2022		2023		2022
Foreign currency	Nonoperating income/expense	$	(9.2)	$	13.5	$	10.3	$	14.1
Interest rate	Interest expense	(1.5)		21.8		0.1		(1.1)
Cash flow hedges		$	(10.7)	$	35.3	$	10.4	$	13.0
Foreign currency denominated debt	Nonoperating income/expense	$	(162.9)	$	259.0			$	—
Foreign currency derivatives	Nonoperating income/expense	7.6		4.4
Foreign currency derivatives(1)	Interest expense									$	5.7	$	2.3
Net investment hedges		$	(155.3)	$	263.4			$	—	$	5.7	$	2.3
Foreign currency	Nonoperating income/expense									$	2.1	$	(4.5)
Equity	Selling, general & administrative expenses									$	15.6	$	(21.5)
Undesignated derivatives										$	17.7	$	(26.0)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

Fair Value Hedges

The Company enters into fair value hedges to reduce the exposure to changes in fair values of certain liabilities. The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by the use of interest rate swaps. At March 31, 2023, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $1.2 billion, which included a decrease of $79 million of cumulative hedging adjustments. For the three months ended March 31, 2023, the Company recognized a $12.5 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense.

Cash Flow Hedges

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of March 31, 2023, the Company had foreign currency derivatives outstanding with an equivalent notional amount of $1.6 billion that hedged a portion of forecasted foreign currency denominated cash flows.

To protect against the variability of interest rates on anticipated bond issuances, the Company may use treasury locks to hedge a portion of expected future cash flows. As of March 31, 2023, the Company had derivatives outstanding with a notional amount of $500 million that hedge a portion of forecasted cash flows.

Based on market conditions at March 31, 2023, the $14 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months.

Net Investment Hedges

The Company uses foreign currency denominated debt (third-party and intercompany) and foreign currency derivatives to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI. As of March 31, 2023, $13.9 billion of the Company's third-party foreign currency denominated debt, $1.0 billion of the Company's intercompany foreign currency denominated debt and $662 million of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

Undesignated Derivatives

The Company enters into certain derivatives that are not designated for hedge accounting. Therefore, the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. Changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, together with the currency gain or loss from the hedged balance sheet position.

Credit Risk

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at March 31, 2023 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At March 31, 2023, the Company was required to post $120 million of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.

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Franchise Arrangements

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Franchise Arrangements

Franchise Arrangements

Revenues from franchised restaurants consisted of:

	Quarters Ended
	March 31,
In millions	2023		2022
Rents	$	2,269.8	$	2,081.1
Royalties	1,303.0		1,168.7
Initial fees	14.7		13.0
Revenues from franchised restaurants	$	3,587.5	$	3,262.8

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Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance:

•U.S. - the Company's largest market. The segment is 95% franchised as of March 31, 2023.

•International Operated Markets - comprised of markets or countries in which the Company operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the U.K. The segment is 89% franchised as of March 31, 2023. During the second quarter of 2022, the Company completed the sale of its business in Russia, resulting in a total exit from the market.

•International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System. Corporate activities are also reported in this segment. The segment is 98% franchised as of March 31, 2023.

The following table presents the Company’s revenues and operating income by segment:

	Quarters Ended
	March 31,
In millions	2023		2022
Revenues
U.S.	$	2,487.6	$	2,175.6
International Operated Markets	2,794.8		2,922.1
International Developmental Licensed Markets & Corporate	615.4		567.9
Total revenues	$	5,897.8	$	5,665.6
Operating Income
U.S.	$	1,295.1	$	1,151.0
International Operated Markets	1,192.7		1,129.2
International Developmental Licensed Markets & Corporate	44.6		32.4
Total operating income	$	2,532.4	$	2,312.6

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Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. There were no subsequent events that required recognition or disclosure.

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2022 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter ended March 31, 2023 do not necessarily indicate the results that may be expected for the full year.

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Recent Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023 that are of significance or potential significance to the Company.

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Restaurant Information (Tables)

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Restaurant Information by Ownership Type

The following table presents restaurant information by ownership type:

Restaurants at March 31,	2023	2022
Conventional franchised	21,701	21,558
Developmental licensed	8,289	7,981
Foreign affiliated	8,427	8,013
Total Franchised	38,417	37,552
Company-operated	2,118	2,792
Total Systemwide restaurants	40,535	40,344

Restaurant information reflects the sale of over 850 restaurants in conjunction with the exit of our business in Russia in the second quarter of 2022, most of which were Company-operated.

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Restructuring (Tables)

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Summary of Accrued Expenses Balance

The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions):

	Employee Termination Benefits		Costs to Terminate Contracts		Other Related Costs		Total
2023
Beginning Balance	$	—	$	—	$	—	$	—
Restructuring Costs Incurred	110.3		26.9		43.3		180.5
Cash Payments	(1.5)		(1.4)		(0.3)		(3.2)
Other Non-Cash Items	—		—		(14.1)		(14.1)
Accrued Balance at End of Period	$	108.8	$	25.5	$	28.9	$	163.2

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Financial Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Values of Derivative Instruments Included on Consolidated Balance Sheet

The following table presents the fair values of derivative instruments included on the condensed consolidated balance sheet:

	Derivative Assets					Derivative Liabilities
In millions	Balance Sheet Classification	March 31, 2023		December 31, 2022		Balance Sheet Classification	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Foreign currency	Prepaid expenses and other current assets	$	39.9	$	53.3	Accrued payroll and other liabilities	$	(23.0)	$	(17.9)
Interest rate	Prepaid expenses and other current assets	—		—		Accrued payroll and other liabilities	(1.5)		—
Foreign currency	Miscellaneous other assets	32.3		28.7		Other long-term liabilities	(27.6)		(30.7)
Interest rate	Miscellaneous other assets	—		—		Other long-term liabilities	(79.0)		(91.5)
Total derivatives designated as hedging instruments		$	72.2	$	82.0		$	(131.1)	$	(140.1)
Derivatives not designated as hedging instruments
Equity	Prepaid expenses and other current assets	$	219.3	$	200.5	Accrued payroll and other liabilities	$	(0.1)	$	(1.6)
Foreign currency	Prepaid expenses and other current assets	0.6		—		Accrued payroll and other liabilities	—		—
Equity	Miscellaneous other assets	—		—
Total derivatives not designated as hedging instruments		$	219.9	$	200.5		$	(0.1)	$	(1.6)
Total derivatives		$	292.1	$	282.5		$	(131.2)	$	(141.7)

Derivatives Pretax Amounts Affecting Income and Other Comprehensive Income

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2023 and 2022, respectively:

	Location of gain or loss recognized in income on derivative	Gain (loss) recognized in AOCI				Gain (loss) reclassified into income from AOCI				Gain (loss) recognized in income on derivative
In millions		2023		2022		2023		2022		2023		2022
Foreign currency	Nonoperating income/expense	$	(9.2)	$	13.5	$	10.3	$	14.1
Interest rate	Interest expense	(1.5)		21.8		0.1		(1.1)
Cash flow hedges		$	(10.7)	$	35.3	$	10.4	$	13.0
Foreign currency denominated debt	Nonoperating income/expense	$	(162.9)	$	259.0			$	—
Foreign currency derivatives	Nonoperating income/expense	7.6		4.4
Foreign currency derivatives(1)	Interest expense									$	5.7	$	2.3
Net investment hedges		$	(155.3)	$	263.4			$	—	$	5.7	$	2.3
Foreign currency	Nonoperating income/expense									$	2.1	$	(4.5)
Equity	Selling, general & administrative expenses									$	15.6	$	(21.5)
Undesignated derivatives										$	17.7	$	(26.0)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

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Franchise Arrangements (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Revenues from Franchised Restaurants

Revenues from franchised restaurants consisted of:

	Quarters Ended
	March 31,
In millions	2023		2022
Rents	$	2,269.8	$	2,081.1
Royalties	1,303.0		1,168.7
Initial fees	14.7		13.0
Revenues from franchised restaurants	$	3,587.5	$	3,262.8

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Revenues and Operating Income by Segment

The following table presents the Company’s revenues and operating income by segment:

	Quarters Ended
	March 31,
In millions	2023		2022
Revenues
U.S.	$	2,487.6	$	2,175.6
International Operated Markets	2,794.8		2,922.1
International Developmental Licensed Markets & Corporate	615.4		567.9
Total revenues	$	5,897.8	$	5,665.6
Operating Income
U.S.	$	1,295.1	$	1,151.0
International Operated Markets	1,192.7		1,129.2
International Developmental Licensed Markets & Corporate	44.6		32.4
Total operating income	$	2,532.4	$	2,312.6

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Restaurant Information (Details) - Restaurant	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2023	Mar. 31, 2022
Franchisor Disclosure
Number of Restaurants		40,535	40,344
Number of restaurants sold	850
Franchised
Franchisor Disclosure
Number of Restaurants		38,417	37,552
Franchised | Conventional franchised
Franchisor Disclosure
Number of Restaurants		21,701	21,558
Franchised | Developmental licensed
Franchisor Disclosure
Number of Restaurants		8,289	7,981
Franchised | Affiliated
Franchisor Disclosure
Number of Restaurants		8,427	8,013
Company-operated
Franchisor Disclosure
Number of Restaurants		2,118	2,792

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Per Common Share Information (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Dilutive effect of share-based compensation (in shares)	4.6	5.0
Antidilutive share-based compensation awards (in shares)	2.3	1.7

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Restructuring (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Incurred Cost	$ 180,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	180,000,000
Restructuring and Related Cost, Cost Incurred to Date	180,500,000
U.S.
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Incurred Cost	58,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	58,000,000
International Operated Markets
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Incurred Cost	71,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	71,000,000
International Developmental Licensed Markets and Corporate
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Incurred Cost	51,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	51,000,000
Minimum
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Expected Cost	200,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	200,000,000
Maximum
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Expected Cost	250,000,000
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	$ 250,000,000

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Restructuring (Summary of Accrued Expenses Balance) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Jan. 01, 2023
Restructuring and Related Activities [Abstract]
Restructuring Reserve	$ 163,200,000	$ 0
Restructuring and Related Cost, Cost Incurred to Date	180,500,000
Payments for Restructuring	(3,200,000)
Restructuring Reserve, Accrual Adjustment	(14,100,000)
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date	180,500,000
Payments for Restructuring	3,200,000
Restructuring Reserve, Accrual Adjustment	14,100,000
Restructuring Reserve	163,200,000	$ 0
Contract Termination
Restructuring and Related Activities [Abstract]
Restructuring Reserve	25,500,000
Restructuring and Related Cost, Cost Incurred to Date	26,900,000
Payments for Restructuring	(1,400,000)
Restructuring Reserve, Accrual Adjustment	0
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date	26,900,000
Payments for Restructuring	1,400,000
Restructuring Reserve, Accrual Adjustment	0
Restructuring Reserve	25,500,000
Other Restructuring
Restructuring and Related Activities [Abstract]
Restructuring Reserve	28,900,000
Restructuring and Related Cost, Cost Incurred to Date	43,300,000
Payments for Restructuring	(300,000)
Restructuring Reserve, Accrual Adjustment	(14,100,000)
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date	43,300,000
Payments for Restructuring	300,000
Restructuring Reserve, Accrual Adjustment	14,100,000
Restructuring Reserve	28,900,000
Restructuring Reserve [Roll Forward]
Restructuring and Related Activities [Abstract]
Restructuring Reserve	108,800,000
Restructuring and Related Cost, Cost Incurred to Date	110,300,000
Payments for Restructuring	(1,500,000)
Restructuring Reserve, Accrual Adjustment	0
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date	110,300,000
Payments for Restructuring	1,500,000
Restructuring Reserve, Accrual Adjustment	0
Restructuring Reserve	$ 108,800,000

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Income Taxes (Additional Information) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Effective Income Tax Rate Reconciliation, Percent	20.50%	28.30%
Effective Income Tax Rate Reconciliation, Tax Settlement Reserve, Foreign, Amount		$ 500
Effective Income Tax Rate Reconciliation, Excluding Tax Settlement Reserve, Foreign, Percent	20.90%	21.30%

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Fair Value Measurements (Details) $ in Billions	Mar. 31, 2023 USD ($)
Fair Value Disclosures [Abstract]
Debt obligations, fair value	$ 35.6
Debt obligations, carrying amount	$ 37.1

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Financial Instruments and Hedging Activities (Fair Values of Derivative Instruments Included on Consolidated Balance Sheet) (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	$ 292.1	$ 282.5
Liability Derivatives Fair Value	(131.2)	(141.7)
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	72.2	82.0
Liability Derivatives Fair Value	(131.1)	(140.1)
Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	219.9	200.5
Liability Derivatives Fair Value	(0.1)	(1.6)
Foreign Exchange [Member] | Prepaid Expenses and Other Current Assets [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	39.9	53.3
Foreign Exchange [Member] | Prepaid Expenses and Other Current Assets [Member] | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	0.6	0.0
Foreign Exchange [Member] | Accrued Expenses And Other Current Liabilities [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	(23.0)	(17.9)
Foreign Exchange [Member] | Accrued Expenses And Other Current Liabilities [Member] | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	0.0	0.0
Foreign Exchange [Member] | Other Assets [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	32.3	28.7
Foreign Exchange [Member] | Other long-term liabilities | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	(27.6)	(30.7)
Equity [Member] | Prepaid Expenses and Other Current Assets [Member] | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	219.3	200.5
Equity [Member] | Accrued Expenses And Other Current Liabilities [Member] | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	(0.1)	(1.6)
Equity [Member] | Other Assets [Member] | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	0.0	0.0
Interest Rate Contract [Member] | Prepaid Expenses and Other Current Assets [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	0.0	0.0
Interest Rate Contract [Member] | Accrued Expenses And Other Current Liabilities [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	(1.5)	0.0
Interest Rate Contract [Member] | Other Assets [Member] | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Asset Derivatives Fair Value	0.0	0.0
Interest Rate Contract [Member] | Other long-term liabilities | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liability Derivatives Fair Value	$ (79.0)	$ (91.5)

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Financial Instruments and Hedging Activities (Derivatives Pretax Amounts Affecting Income and Other Comprehensive Income) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Derivatives in Cash Flow Hedging Relationships
Cash flow hedges
Gain (loss) recognized in AOCI	$ (10.7)	$ 35.3
Gain (loss) reclassified into income from AOCI	10.4	13.0
Net Investment Hedging Relationships
Net investment hedges
Gain (loss) recognized in AOCI	(155.3)	263.4
Gain (loss) reclassified into income from AOCI		0.0
Derivative instruments, gain (loss) recognized in income, net	5.7	2.3
Derivatives Not Designated as Hedging Instruments
Net investment hedges
Derivative instruments, gain (loss) recognized in income, net	17.7	(26.0)
Foreign Exchange [Member] | Derivatives in Cash Flow Hedging Relationships
Cash flow hedges
Gain (loss) recognized in AOCI	(9.2)	13.5
Gain (loss) reclassified into income from AOCI	10.3	14.1
Foreign Exchange [Member] | Derivatives Not Designated as Hedging Instruments
Net investment hedges
Derivative instruments, gain (loss) recognized in income, net	2.1	(4.5)
Interest Rate Contract [Member] | Derivatives in Cash Flow Hedging Relationships
Cash flow hedges
Gain (loss) recognized in AOCI	(1.5)	21.8
Gain (loss) reclassified into income from AOCI	0.1	(1.1)
Other Foreign Currency Denominated Debt [Member] | Net Investment Hedging Relationships
Net investment hedges
Gain (loss) recognized in AOCI	(162.9)	259.0
Gain (loss) reclassified into income from AOCI		0.0
Foreign Exchange Forward [Member] | Net Investment Hedging Relationships
Net investment hedges
Gain (loss) recognized in AOCI	7.6	4.4
Cross Currency Interest Rate Contract [Member] | Net Investment Hedging Relationships
Net investment hedges
Derivative instruments, gain (loss) recognized in income, net	5.7	2.3
Equity [Member] | Derivatives Not Designated as Hedging Instruments
Net investment hedges
Derivative instruments, gain (loss) recognized in income, net	$ 15.6	$ (21.5)

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Financial Instruments and Hedging Activities (Additional Information) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Cumulative cash flow hedging gain (losses), after tax	$ 14,000,000
Debt [Member]
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Foreign currency denominated debt designated to hedge investments in certain foreign subsidiaries and affiliates	13,900,000,000
Intercompany Debt [Member]
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Foreign currency denominated debt designated to hedge investments in certain foreign subsidiaries and affiliates	1,000,000,000
Net Investment Hedging Relationships
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Derivative, Notional Amount	662,000,000
Gain (loss) on the fair value of interest rate swaps	5,700,000	$ 2,300,000
Interest Rate Risk [Member] | Fair Value Hedging [Member]
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	79,000,000
Gain (loss) on the fair value of interest rate swaps	(12,500,000)
Royalty Arrangement [Member]
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Derivative, Notional Amount	$ 1,600,000,000
Period covered by hedge	18 months
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Derivative, Notional Amount	$ 1,200,000,000

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Franchise Arrangements (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Rents	$ 2,269.8	$ 2,081.1
Royalties	1,303.0	1,168.7
Initial Fees	14.7	13.0
Revenues from franchised restaurants	$ 3,587.5	$ 3,262.8

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Segment Information (Additional Information) (Details)	Mar. 31, 2023
U.S.
Noncontrolling Interest [Line Items]
Percentage of segment franchised	95.00%
International Operated Markets
Noncontrolling Interest [Line Items]
Percentage of segment franchised	89.00%
International Developmental Licensed Markets and Corporate
Noncontrolling Interest [Line Items]
Percentage of segment franchised	98.00%

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Segment Information (Revenues and Operating Income by Segment) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Total revenues	$ 5,897.8	$ 5,665.6
Operating Income	2,532.4	2,312.6
U.S.
Segment Reporting Information [Line Items]
Total revenues	2,487.6	2,175.6
Operating Income	1,295.1	1,151.0
International Operated Markets
Segment Reporting Information [Line Items]
Total revenues	2,794.8	2,922.1
Operating Income	1,192.7	1,129.2
International Developmental Licensed Markets and Corporate
Segment Reporting Information [Line Items]
Total revenues	615.4	567.9
Operating Income	$ 44.6	$ 32.4