--- title: "McDonald’s Weighs Refranchising as Company-Operated Performance Lags" url: https://burnaze.com/article/9109742b-5e69-4fd6-aeed-0b23c4acd30f source: "QSR Magazine" original_url: https://www.qsrmagazine.com/story/mcdonalds-weighs-refranchising-as-company-operated-performance-lags/ author: "Ben Coley" category: "Burger" industry: "Restaurants" segment: "Burger" published: 2026-05-07T18:05:59.000Z modified: 2026-10-31T13:18:12.677Z image: https://www.qsrmagazine.com/wp-content/uploads/2026/05/mcdonaldsexterior-1.jpg --- # McDonald’s Weighs Refranchising as Company-Operated Performance Lags **TL;DR:** McDonald's is considering selling company-owned locations to franchisees due to underwhelming margin performance in its US company-operated restaurant segment. The company aims to generate strong returns and system outcomes, and may refranchise certain restaurants if they cannot deliver that. *By Ben Coley, originally published in QSR Magazine on 2026-05-07. [Read the original](https://www.qsrmagazine.com/story/mcdonalds-weighs-refranchising-as-company-operated-performance-lags/).* ## Story McDonald’s is not happy with the performance of its company-owned footprint. During its Q1 earnings call, CFO Ian Borden said U.S. company-operated margins “were not acceptable,” adding that the company is actively reviewing whether certain restaurants are better suited in the hands of franchisees. In Q1, U.S. corporate store margins fell 25 percent year-over-year. The burger giant finished the quarter with 13,728 U.S. restaurants, consisting of 13,087 franchised units and 641 company-owned outlets. Internationally, McDonald’s has 1,386 corporately owned locations. Borden said the decision to own and operate restaurants is based on generating strong returns and system outcomes. “If we can’t deliver that, I know we’ve got a lot of great owner-operators in the U.S. or around the world that can run those restaurants well and generate strong outcomes for either themselves or for the overall business,” Borden said. CEO Chris Kempczinski echoed that sentiment, noting the company is always focused on putting restaurants “in the hands of the best operator.” He said current U.S. performance suggests company-run locations “are not being run as well as they could be,” adding, “it’s either on us to fix that, or we’re going to find franchisees who can run the restaurant better.” Kempczinski pointed to a clear gap in profitability, saying franchisees are generating stronger restaurant-level margins than company-operated stores. He also attributed some of the company-operated pressure to recent decisions around labor and pricing, noting that investing in additional labor while being “more restrained around pricing” weighed on performance, though he emphasized those issues are fixable. “We’re working closely with the U.S. team as we are in every other market,” Kempczinski said. “We’ll continue to evaluate that. I would say if we’re going to make any changes on that would be a topic we would talk about at Investor Day [in September].” The discussion around ownership structure comes as franchisee profitability faces its own pressure across the system. Kempczinski said operators in the U.S. and international markets are feeling strain on cash flow due to inflation, including higher commodity costs such as beef. “What we’ve talked about with franchisees, our system, everybody needs to be successful in our system. We’re keenly focused, along with our franchisees, on how do we make sure that we can navigate some of these cost pressures and the other investments in the business and also make sure that we’re able to grow franchisee cash flow,” Kempczinski said. Despite those pressures, leadership expressed confidence in the system’s financial strength and its ability to continue investing. Borden said McDonald’s expects to navigate inflation through 2026 with the help of hedging and supply chain advantages, while maintaining focus on driving top-line growth to offset external pressures. Growth remains a priority, though executives stressed that expansion will be disciplined. McDonald’s continues to target roughly 50,000 restaurants by the end of 2027. The chain ended Q1 with 45,699 restaurants globally, up from 43,756 in Q1 2025. At this pace, the brand remains on track to meet its 50,000-unit goal, which was first announced toward the end of 2023. However, Borden and Kempczinski emphasized that development decisions will be based on returns rather than hitting a fixed unit target. “We’re not chasing an absolute growth number,” Kempczinski said, noting that locations that no longer meet return thresholds due to rising construction or supply chain costs will be removed from the pipeline. Even with near-term pressures on margins and franchisee cash flow, the CEO said the company remains confident in its ability to fund expansion when conditions are right. “We have a tremendous amount of financial firepower in our system despite some of the pressures that exist in some markets with franchisees on cash flow because of inflation. Their overall financial situation, when you look at debt levels and everything else, we’re in a really good spot there,” Kempczinski said. “I have no concerns about our ability when it makes sense, when we can get good returns, to continue opening restaurants at a strong pace. That’s going to be ultimately what drives these decisions because we’ve got plenty of capital to spend if we need it, and we see good opportunities.” ## Entities - unit expansion (topic) - QSR (sector) - QSR Magazine (publication) - McDonald's (company) - Ben Coley (person) - Chris Kempczinski (person) - refranchising (topic) - franchisee profitability (topic) - Ian Borden (person) - company performance (topic) --- Originally reported by Ben Coley, QSR Magazine (https://www.qsrmagazine.com/story/mcdonalds-weighs-refranchising-as-company-operated-performance-lags/). Summarized by Burnaze (https://burnaze.com/article/9109742b-5e69-4fd6-aeed-0b23c4acd30f).