Common-Size Income Statement

McDonald’s Corp., common-size consolidated income statement

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Revenues from franchised restaurants	61.55%	60.63%	60.55%	60.85%	56.35%
Sales by Company-owned and operated restaurants	36.04%	37.74%	38.21%	37.74%	42.15%
Other revenues	2.41%	1.63%	1.24%	1.42%	1.51%
Revenues	100.00%	100.00%	100.00%	100.00%	100.00%
Franchised restaurants, occupancy expenses	-9.74%	-9.78%	-9.71%	-10.14%	-10.05%
Food & paper	-11.18%	-11.55%	-11.92%	-11.81%	-13.34%
Payroll & employee benefits	-10.81%	-11.42%	-11.32%	-11.29%	-11.53%
Occupancy & other operating expenses	-8.77%	-9.19%	-9.02%	-8.74%	-9.79%
Company-operated restaurant expenses	-30.76%	-32.16%	-32.26%	-31.84%	-34.65%
Other restaurant expenses	-2.10%	-1.31%	-0.91%	-1.06%	-1.12%
Gross margin	57.41%	56.75%	57.12%	56.97%	54.17%
Depreciation and amortization	-1.70%	-1.72%	-1.50%	-1.60%	-1.42%
Other	-9.61%	-9.31%	-9.55%	-10.75%	-10.24%
Selling, general & administrative expenses	-11.31%	-11.03%	-11.05%	-12.35%	-11.66%
Gains on sales of restaurant businesses	0.49%	0.36%	0.40%	0.26%	0.42%
Equity in earnings of unconsolidated affiliates	0.71%	0.61%	0.60%	0.49%	0.76%
Asset dispositions and other income (expense), net	-0.36%	-0.39%	0.03%	-0.59%	-0.32%
Impairment and other gains (charges), net	-0.84%	-1.12%	-1.42%	-4.36%	1.23%
Other operating income (expense), net	0.00%	-0.54%	-0.39%	-4.20%	2.08%
Operating income	46.10%	45.19%	45.68%	40.42%	44.59%
Interest expense, net of capitalized interest	-5.88%	-5.81%	-5.34%	-5.21%	-5.11%
Nonoperating income (expense), net	0.32%	0.54%	0.93%	-1.46%	-0.18%
Income before provision for income taxes	40.53%	39.91%	41.27%	33.76%	39.31%
Provision for income taxes	-8.68%	-8.19%	-8.05%	-7.11%	-6.82%
Net income	31.85%	31.72%	33.22%	26.65%	32.49%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The common-size income statement reveals several noteworthy trends over the five-year period. Revenues are consistently represented as 100%, allowing for a clear view of the proportional contribution of each line item. A significant portion of revenue consistently originates from franchised restaurants, exhibiting a gradual increase from 56.35% to 61.55%. Conversely, revenue from company-owned and operated restaurants demonstrates a declining trend, moving from 42.15% to 36.04%.

Revenue Composition: The increasing reliance on franchised revenue suggests a potential shift in business model towards a more capital-light approach. The decrease in company-owned revenue could indicate strategic divestitures or slower growth in those segments. Other revenues show a notable increase, rising from 1.51% to 2.41%, potentially indicating diversification efforts or gains from new revenue streams.
Cost of Goods Sold & Operating Expenses: Company-operated restaurant expenses represent the largest proportional cost, decreasing from 34.65% to 30.76%. Food & paper costs also show a decreasing trend, from 13.34% to 11.18%, potentially reflecting improved supply chain management or menu adjustments. Payroll and employee benefits remain relatively stable, fluctuating around 11%. Occupancy and other operating expenses also decreased slightly over the period.
Profitability: Gross margin demonstrates a generally positive trend, increasing from 54.17% to 57.41%, despite some fluctuation. Operating income as a percentage of revenue initially decreased from 44.59% to 40.42%, then recovered to 46.10%. This suggests potential operational challenges in 2022, followed by improvements in efficiency or cost control. Net income margin follows a similar pattern, declining from 32.49% to 26.65% and then rising to 31.85%.
Non-Operating Items & Taxes: Interest expense consistently represents a significant non-operating expense, increasing from 5.11% to 5.88%. The provision for income taxes as a percentage of revenue also increased over the period, from 6.82% to 8.68%, likely reflecting changes in tax regulations or profitability. Several years show notable fluctuations in impairment and other gains/charges, and other operating income/expense, suggesting infrequent but potentially material impacts from asset disposals or restructuring activities.

Overall, the financial performance demonstrates a degree of volatility, particularly in operating income and net income. The shift towards increased franchised revenue and decreasing company-owned revenue is a key trend. While costs are generally being managed effectively, the increasing interest expense and tax provision warrant continued monitoring.

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McDonald’s Corp. (NYSE:MCD)

Common-Size Income Statement