A National Owners Association survey of more than 100 McDonald’s franchisees finds that 95% saw store-level profitability fall in the first quarter of 2026, and 97% say the chain’s current plan is not improving their cash flow. The results arrive just as McDonald’s prepares a remodel cycle estimated to cost each franchisee between $400,000 and $700,000 per location.
McDonald’s operates roughly 14,000 franchise restaurants in the United States, almost all of them run by independent franchisees. The National Owners Association (NOA), a franchisee group that operates independently from the company, surveyed more than 100 of the chain’s owner-operators and shared the results with Restaurant Business. The picture they describe is one of a system under financial strain at a particularly delicate moment for the brand.
A System Under Financial Strain: What the Survey Found
The NOA survey found that nearly eight in ten franchisees reported cash flow that is “not sufficient to support required reinvestment obligations.” Ninety-nine percent said their food and paper costs have increased since late 2025. The association, in a message to the company seen by Restaurant Business, described the situation in direct terms: “Restaurant-level profitability continues to deteriorate, while rising operating costs, constrained pricing flexibility, and increasing reinvestment obligations are placing significant pressure on owner/operators,” says the National Owners Association. All but 3% of respondents reported that their control over pricing had been either weakened or removed altogether.
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A Discount Strategy That Generated Traffic Losses Instead
McDonald’s U.S. same-store sales rose 0.8% in the second quarter of 2026, but that result came alongside weak traffic. The company introduced a $3 and Under value menu and a series of related discounts, in part to attract lower-income consumers. Three-quarters of franchisees surveyed said they felt directly pressured to lower prices, and more than eight in ten reported that the discounts did not generate enough additional customers to offset the margin impact. The failed approach is estimated to have cost the system approximately $310 million in a single quarter. Following the results, U.S. market president Joe Erlinger stepped down and was replaced by longtime McDonald’s executive Skye Anderson.
A Remodel Program Worth Billions Waiting in the Wings
The profitability concerns arrive at a difficult time. McDonald’s is preparing a 10-year store remodel cycle expected to begin in 2027 and 2028. Franchisees in the NOA survey estimated their individual costs for the upgrades at between $400,000 and $700,000 per location. The association questioned why a large-scale facility investment is being planned so soon after the previous remodel program, which had already required operators to take on significant debt. CEO Chris Kempczinski described franchisees’ current borrowing capacity as still strong, and expressed confidence in the program’s execution.
Corporate and Franchisees Preparing for Another Round of Negotiations
McDonald’s responded to the NOA survey by noting that it represents “a small subset” of its more than 2,000 franchisees, and that significant collaboration between the company and elected operator groups is already underway. Kempczinski identified overreliance on marketing and the discounted menu as root causes of the U.S. performance shortfall. The company will need to build franchisee consensus around a new value strategy to replace the discontinued program. As Kempczinski acknowledged in his investor remarks, that process requires franchisee agreement rather than a corporate directive, making the outcome of ongoing talks central to the chain’s near-term direction.
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