Catering giant ventures into advertising! McDonald's (MCD.US) builds its own media network, targeting a $1 billion high-profit business

According to Zhitong Finance APP, McDonald's (MCD.US) is following in the footsteps of retail giants like Amazon (AMZN.US) and Walmart (WMT.US), announcing plans to build its own media network. In August this year, as part of a pilot program, 450 company-owned McDonald's restaurants in the U.S. began displaying advertisements from other companies on their digital drive-thru ordering screens. The project is still in its early stages and has not yet been rolled out to the remaining approximately 14,000 franchised McDonald's restaurants in the U.S. However, McDonald's hopes this business will eventually grow into a billion-dollar operation for the company.

McDonald's Global Chief Marketing Officer and Executive Vice President of New Business Ventures, Morgan Flatley, stated during the Investor Day presentation, "Retail media is one of the fastest-growing areas in advertising, and it is expected that by 2028, the market size in the U.S. alone will exceed $100 billion." He added, "This is an opportunity to create revenue for the entire system with almost no additional costs, no increase in operational complexity, and no disruption to our customer experience."

As costs for key inputs such as beef continue to rise, and given the chain's plans to invest billions of dollars in restaurant upgrades over the next decade, this new business could eventually provide McDonald's with a steady stream of high-margin revenue.

Within the restaurant industry, McDonald’s will be a pioneer in establishing its own media network. McDonald's Chief Financial Officer Ian Borden said the company has unique advantages that could make this initiative successful. Ian Borden commented, "At our scale and size, we own one of the most valuable brands across all industries. We serve about 85% of the U.S. population each year, so our coverage is highly unique; and with 14,000 stores across the U.S., that means we are present in every community and have touchpoints with every consumer."

Retailers like Amazon and Walmart have already found success operating their own media networks, and such businesses usually have high profit margins. Data released by Amazon shows that its advertising services sales reached $68.6 billion in 2025, accounting for just under 10% of its total revenue. Amazon's ads cover multiple business platforms, from shopping pages to Prime Video, Amazon Lockers, and the livestreaming platform Twitch, as well as third-party apps and websites.

Walmart has not disclosed the specific sales of its advertising business, but the company said its U.S. ad business, Connect, saw sales grow 43% in the second fiscal quarter. The retailer's media network displays ads in its app, website, and in over 4,600 stores nationwide, and also appears on external apps such as Instagram. Walmart also acquired TV manufacturer Vizio at the end of 2024, with one goal being to expand its advertising business.

McDonald's announcement of this new business is part of the company's Investor Day event, held at its Chicago headquarters. In addition to the media network, company executives further outlined plans to drive sales growth through restaurant upgrades with higher prices and improved food quality.

This Investor Day event attracted significant attention as investors sought to understand how McDonald’s plans to revitalize its momentum amid slowing growth. In early August, McDonald's delivered a solid but slowing Q2 2026 performance report. Financial results showed that global systemwide sales grew 5% year-over-year in Q2, or 4% after excluding currency impacts, reaching $37 billion; consolidated revenue was $7.1 billion, slightly below the market forecast of $7.12 billion. Operating profit was $3.338 billion, up 3% year-over-year; adjusted earnings per share were $3.38, up 6% year-over-year, beating expectations of $3.32.

Despite solid profitability, momentum has slowed. McDonald's global same-store sales grew 1.3% in the second quarter, much lower than 3.8% in the same period last year. In the U.S. market, same-store sales grew 0.8%, down from 2.5% last year; the growth was mainly driven by higher average order value, including contributions from optimized product mix, but traffic remained negative, indicating consumer visits have not fully recovered. Facing headwinds in its core market, the company announced the appointment of senior executive Skye Anderson as President of McDonald's U.S. to boost its U.S. business execution.

Meanwhile, International Operated Markets (IOM) saw same-store sales rise 1.5%, compared to 4% a year earlier. Germany, Australia, and the UK performed well, while France lagged. International Developmental Licensed Markets (IDL) same-store sales grew 1.9%, compared to 5.6% a year ago.

It is worth noting that the franchise business model remains a core advantage for McDonald's. Since franchisees bear most of the restaurant operation costs, McDonald’s mainly earns income through franchise fees and rent, resulting in relatively stable income and profits. The company's franchise restaurant revenue reached $4.393 billion in Q2, up 4% year-over-year, accounting for about 62% of total revenue; for the first half of the year, franchise restaurant revenue was $8.399 billion, up 7% year-over-year, with a growth rate higher than total revenue growth, further demonstrating the franchise model's support for cash flow and profitability.

In addition, amid an overall slowdown in the restaurant industry, the digital membership system has become a key driver for increasing purchase frequency at McDonald’s. In the past 12 months, sales contributed by members exceeded $40 billion, up more than 20% year-over-year, far surpassing the 5% growth rate of overall systemwide sales; 90-day active members reached 220 million, up 13% year-over-year. The expanding membership not only increases repurchase rates but also enhances precision marketing based on consumer data. With the continued deepening of digital penetration, member spending is becoming an important driver of future growth for the company.

McDonald’s is also continuing its "Accelerating the Organization" transformation plan. The cumulative reorganization costs for the first half reached $99 million. Excluding this impact, adjusted operating profit grew by about 9% in the first half, showing initial benefits of reform. However, whether there will be additional restructuring costs in the future and whether the reforms can continue to improve operational efficiency remain key concerns for the market.