Restaurant giants sell advertisements across borders! McDonald's (MCD.US) self-built media network points to a $1 billion high-profit business

The Zhitong Finance App learned that McDonald's (MCD.US) is following in the footsteps of retail giants such as Amazon (AMZN.US) and Walmart (WMT.US) and announced plans to build its own media network. In August of this year, as part of a pilot program, 450 US direct-run restaurants under McDonald's began displaying advertisements from other companies on digital drive-through ordering screens. The project is still in its early stages and has yet to be promoted to the remaining 14,000 US stores operated by the franchisee. However, McDonald's hopes that the business will eventually grow into a $1 billion business.

Morgan Flatley, McDonald's Global Chief Marketing Officer and Executive Vice President of New Business Venture Capital, said during the Investor Day presentation: “Commercial media is one of the fastest growing sectors in the advertising sector. The US market alone is expected to exceed $100 billion by 2028.” He added, “This is an opportunity to generate revenue for the entire system, with little to no additional cost, no added operational complexity, and no disruption to our customer experience.”

As the cost of key inputs such as beef rises, and the restaurant chain plans to invest billions of dollars to upgrade restaurants over the next ten years, this business may eventually bring McDonald's a steady stream of high-margin revenue.

In the restaurant industry, McDonald's will be a pioneer in building its own media network. McDonald's chief financial officer Ian Borden said the company has unique advantages and is expected to make this business successful. Ian Borden said, “Within our size and volume, we have one of the most valuable brands among companies in every industry. We serve at least 85% of the US population each year, so our coverage is unique; at the same time, we have 14,000 stores in the US, which means we are present in every community and connect with every consumer.”

Retailers such as Amazon and Walmart have been successful in running their own media networks, and such businesses usually have high profit margins. According to data released by Amazon, its advertising service sales reached 68.6 billion US dollars in 2025, accounting for slightly less than 10% of the company's total revenue. Amazon's ads span multiple business platforms, from shopping pages to Prime Video, lockers, and the live streaming platform Twitch, as well as third-party apps and websites.

Walmart did not disclose the specific sales results of its advertising business, but the company said that its US advertising business Connect increased sales by 43% in the second fiscal quarter. The retailer's media network will display ads on its apps, websites, and more than 4,600 stores across the US, as well as on external apps such as Instagram. Walmart also bought TV manufacturer Vizio at the end of 2024, one of its goals was to expand its advertising business.

The new business announced by McDonald's this time is part of the company's Investor Day event. The event was held at McDonald's headquarters in Chicago. In addition to the media network, company executives further explained plans to drive sales growth through upgrading high-priced restaurants and improving food quality.

McDonald's Investor Day event attracted much attention as investors sought to understand how the company could regain its momentum in the face of slowing growth. McDonald's handed over a steady but slowing report card for the second quarter of 2026 in early August. According to financial reports, the company's global systemic sales in the second quarter increased 5% year on year and increased 4% after excluding exchange rate factors to reach 37 billion US dollars; consolidated revenue was 7.1 billion US dollars, slightly lower than market expectations of 7.12 billion US dollars. Operating profit was $3.338 billion, up 3% year over year; adjusted earnings per share were $3.38, up 6% year over year, higher than market expectations of $3.32.

Despite solid earnings performance, growth momentum has weakened. McDonald's global comparable sales increased by 1.3% in the second quarter, significantly lower than 3.8% in the same period last year. Among them, comparable sales in the US market increased by 0.8%, down from 2.5% in the same period last year; the increase was mainly due to the increase in customer unit prices, including contributions brought about by product structure optimization, but comparable customer traffic was still negative, indicating that the frequency of consumers arriving at stores has not fully recovered. Faced with growing pressure from the core market, the company announced the appointment of senior executive Skye Anderson as McDonald's US president to enhance the execution of the US business.

At the same time, comparable sales in the International Direct Market (IOM) increased by 1.5%, compared to 4% in the same period last year. Among them, Germany, Australia, and the United Kingdom performed well, while the French market performed poorly. Comparable sales in the International Licensing Market (IDL) increased 1.9% compared to 5.6% in the same period last year.

It is worth mentioning that the franchise model is still the core advantage of McDonald's business model. Since franchisees bear most of the costs of restaurant operations, McDonald's mainly obtains revenue by collecting franchise fees and rents, so there is relatively little fluctuation in revenue and profit. The company's franchised restaurant revenue in the second quarter was US$4.393 billion, up 4% year on year, accounting for about 62% of total revenue; in the first half of this year, franchised restaurant revenue reached US$8.399 billion, up 7% year on year. The growth rate was higher than the overall revenue growth rate, further reflecting the franchise model's support for cash flow and profitability.

Furthermore, in the context of the overall growth of the catering industry slowing down, the digital membership system is becoming a key driving force for McDonald's to increase consumption frequency. In the past 12 months, the system sales contributed by members exceeded 40 billion US dollars, an increase of more than 20% over the previous year, far higher than the 5% growth rate of overall system sales; the number of active members in 90 days has reached 220 million, an increase of 13% over the previous year. The expansion of membership has not only increased the repurchase rate, but also enhanced accurate marketing capabilities based on consumption data. As digital penetration continues to increase, membership consumption is becoming an important driving force for the company's future growth.

McDonald's is also continuing to advance its “Accelerate Organizational Change” program. The cumulative restructuring costs for the first half of the year reached 99 million US dollars. Excluding this impact, adjusted operating profit increased by about 9% in the first half of the year, indicating the initial results of the reform. However, whether there will still be additional restructuring costs in the future and whether reforms can continue to improve operational efficiency are still the focus of the market's attention.