McDonald’s (MCD) hosts investor day

McDonald’s is expected to share more details about its new strategy to win back diners at its investor day on Wednesday in Chicago.

The company unveiled its new global growth plan, called McDonald’s > NEXT, in June at its biennial worldwide convention for franchisees. Pillars of the strategy include a new restaurant design, better-tasting food and drinks and consumer-led innovation. But executives have otherwise offered few details, holding back until Wednesday’s event.

Nearly three years after McDonald’s previous investor day, the presentation comes after McDonald’s U.S. business disappointed in its most recent quarter. The chain’s same-store sales increased just 0.8%, and traffic to its restaurants fell.

CEO Chris Kempczinski said that the problems were due to shortcomings in execution, like a mixed implementation of its value offerings, rather than issues with the chain’s overall strategy. Skye Anderson, who was tapped as president of McDonald’s U.S. business in the wake of the weak quarter, will likely speak on Wednesday.

Kempczinski, Anderson and the rest of the McDonald’s executive team will have to win over investors, who are increasingly skeptical that the fast-food giant can win over diners in the near term.

Over the past 12 months, the stock has fallen 18%, dragging McDonald’s market value down to about $175 billion. The S&P 500 has climbed 16% in the same period, as optimism about artificial intelligence has offset concerns about the financial health of consumers.

Here’s what McDonald’s presentation is expected to cover:

Over the past two years, value has become all-important to restaurants, which are competing over a smaller pool of customers who care about both price and experience. While chains like Taco Bell and Chili’s have thrived, McDonald’s has struggled recently as its value offerings got lost among its other promotional messages.

Plus, its franchisees have pushed back against discounts, which grow sales but eat into operators’ profits, especially as high beef prices raise expenses. Only about two-thirds of McDonald’s U.S. franchisees implemented its recent “under $3 menu,” executives said in August. For its part, McDonald’s lets franchisees set their own prices, but the company assesses how operators’ menu prices help deliver value.

Analysts expect that McDonald’s will continue to emphasize value, and franchisees’ cooperation will be key to its success.

“We expect MCD to use this event to make it clear to franchisees that adherence to pricing recommendations will be a key factor in evaluating agreement renewals,” Citi Research analyst Jon Tower wrote in a note to clients with his investor day predictions.

Tower also cut his price target for the company to $310 per share from $345 a share, citing investor concerns about franchisees’ buy-in for the company’s overall strategy.

Besides value, McDonald’s is also looking to attract diners through menu offerings with elevated taste and quality.

In recent years, McDonald’s has shifted its menu to include more chicken options, as beef prices have risen and rivals like Chick-fil-A threaten its sales. At the franchisee convention, executives shared that the next evolution of its chicken offerings will be hand-breaded. Chick-fil-A, Raising Cane’s and Popeyes all hand bread or batter their chicken rather than using a machine. The technique usually results in a crispier exterior, but it takes more time and labor.

In addition to chicken, McDonald’s has also leaned into expanded beverage options recently. After winding down CosMc’s, its drink-focused spinoff, McDonald’s has rolled out a variety of beverage options in the U.S., including crafted sodas, refreshers and energy drinks. A handful of international markets, like Germany, have also been rolling out more drink offerings.

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

Roughly every decade, McDonald’s mandates that franchisees remodel their restaurants to fit new aesthetic guidelines and improve their technology and equipment.

And it looks like another round of restaurant renovations is coming as part of the growth strategy. At the convention, franchisees got the first look at the new restaurant design.

Typically, McDonald’s chips in some support for franchisees who are remodeling their restaurants. While upgraded locations usually generate higher sales, operators have to fund the remodels at a time when borrowing costs are elevated. And thanks to tariffs and high energy prices, construction costs are increasing, too.

As a result of the remodel program, McDonald’s capital expenditures could increase by $600 million to $900 million in 2027 and 2028 from its projected spending in 2026, according to a research note from BMO Capital Markets analyst Andrew Strelzik. But executives are expected to share the company’s own projected costs for the remodel program at investor day.

While McDonald’s will likely spend more on capital expenditures over the next two years, the company will likely try to cut costs elsewhere.

McDonald’s will share its outlook for general and administrative spending during investor day, Borden said in August.

McDonald’s could target G&A spending to be less than 2% of its systemwide sales, down from its current goal of 2.2%, Bernstein analyst Danilo Gargiulo wrote in a note to clients. In recent years, the company’s workforce has shrunk as part of a reorganization effort.

Indirectly, McDonald’s will also cut costs by refranchising some of its company-owned restaurants.

Selling locations to franchisees means that McDonald’s will not be responsible for the operational costs or capital expenditures required to run a restaurant successfully. The company will also share more details about those plans at the investor day, according to Borden.