VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Wednesday, December 31, 2025
McDonald's Corporation
MCD · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
McDonald's is a global quick-service restaurant franchisor and operator with three reported segments: U.S., International Operated Markets, and International Developmental Licensed Markets & Corporate. The moat is primarily demand-driven (brand trust and habit) and reinforced by a dense physical restaurant network. The model is strengthened by franchising economics and site-level control from long-term agreements and a large real estate footprint. Key risks include value perception and traffic sensitivity, regulatory shifts affecting franchising and labor, and intense local competition across markets.
Primary segment
International Operated Markets
Market structure
Competitive
Market share
—
HHI: —
Coverage
3 segments · 6 tags
Updated 2025-12-30
Segments
U.S.
Quick-service restaurants and informal eating out (IEO)
Revenue
41%
Structure
Competitive
Pricing
moderate
Share
—
Peers
International Operated Markets
Quick-service restaurants and informal eating out (IEO)
Revenue
48.7%
Structure
Competitive
Pricing
moderate
Share
—
Peers
International Developmental Licensed Markets & Corporate
Quick-service restaurants and informal eating out (IEO) with a focus on licensed and franchised system expansion
Revenue
10.3%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
U.S.
Quick-service restaurants and informal eating out (IEO)
Revenue and operating income shares are computed from the FY2024 10-K segment table (U.S. revenues $10.631B; operating income $5.733B; total revenues $25.920B; total operating income $11.712B). The segment is reported as about 95% franchised at 2024-12-31.
Brand Trust
Demand
Brand Trust
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
The McDonald's brand and core trademarks are treated as critical assets; brand recognition and trust support traffic, franchisee demand, and premium site economics relative to smaller chains.
Erosion risks
- Brand damage from food safety, labor, or social controversies
- Shifts toward healthier food and away-from-burgers preferences
- Sustained value-perception decline from pricing and inflation
Leading indicators
- Comparable sales and guest counts
- Brand preference and value perception tracking
- Market share of visits vs key QSR peers
Counterarguments
- Consumer loyalty in QSR is fragile during downturns and promotions can shift traffic quickly
- Differentiation can narrow if competitors match speed, convenience, and menu innovation
Physical Network Density
Supply
Physical Network Density
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Large restaurant footprint and convenience (drive-thru and delivery coverage) create strong local availability advantages; density supports marketing efficiency and consumer habit formation.
Erosion risks
- Delivery aggregators reduce the advantage of proximity for some occasions
- Rising rent and labor costs pressure unit economics in dense markets
- Zoning and community resistance slows new unit growth
Leading indicators
- Net restaurant additions and closures
- Delivery penetration and app-based order share
- Drive-thru times and service metrics
Counterarguments
- In many metro areas, competitors also have dense footprints
- Consumer demand can shift to fast-casual where location density is less critical
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
The franchising model is reinforced by McDonald's control of many restaurant sites and buildings; control of the underlying real estate increases system discipline and long-term option value (re-franchise or exit a site).
Erosion risks
- Regulatory or political pressure on franchising practices
- Capital intensity of owning and maintaining real estate
- Franchisee relations deteriorate (economics, pricing disputes)
Leading indicators
- Franchisee cash flow and reinvestment rates
- Re-franchising vs company-operated mix changes
- Real estate occupancy and rent spreads and impairment charges
Counterarguments
- Other large franchisors also have sophisticated real estate and contract structures
- Franchisees control local execution and pricing, limiting corporate control over unit-level outcomes
Operational Excellence
Supply
Operational Excellence
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
System standards, repeatable operations, and training processes enable consistent execution at scale across a largely franchised base; consistency is a key component of trust and throughput.
Erosion risks
- Labor shortages increase service variability
- Complex menus slow operations and reduce throughput
- Technology rollouts fail to improve speed and accuracy
Leading indicators
- Order accuracy and customer satisfaction scores
- Average service times (drive-thru and counter)
- Restaurant-level labor turnover
Counterarguments
- Operational playbooks are imitable; competitors can match speed and throughput with focused execution
- System consistency can be harder to enforce as franchisee base grows
International Operated Markets
Quick-service restaurants and informal eating out (IEO)
Revenue and operating income shares are computed from the FY2024 10-K segment table (International Operated Markets revenues $12.628B; operating income $5.946B). The segment is reported as about 89% franchised at 2024-12-31.
Brand Trust
Demand
Brand Trust
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Brand trust and global recognition support customer demand and franchisee attractiveness across major developed markets despite local competition.
Erosion risks
- Local competitors with stronger cultural fit
- Anti-American sentiment and geopolitical backlash
- Regulatory constraints on marketing, packaging, or menu composition
Leading indicators
- Comparable sales by major markets
- Customer satisfaction and brand preference by country
- Frequency and penetration of loyalty users where available
Counterarguments
- Brand advantages can be less pronounced in markets with strong domestic QSR champions
- Menu localization can dilute global consistency and add complexity
Physical Network Density
Supply
Physical Network Density
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Dense presence across large developed markets supports convenience, marketing efficiency, and execution of systemwide initiatives (digital, delivery, operations).
Erosion risks
- Real estate and labor inflation in Europe and other developed markets
- Delivery platforms shift profit pool to intermediaries
- Saturation limits incremental unit growth
Leading indicators
- New unit growth and closures
- Delivery coverage and mix
- Traffic and guest counts vs peers
Counterarguments
- In many countries, competing chains and local independents offer dense alternatives
- Convenience can be offset by quality and health positioning of fast-casual competitors
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
Franchise structure and, in many consolidated markets, control of restaurant real estate underpin stable fee economics and system alignment, though local legal and leasing regimes can vary by country.
Erosion risks
- Local franchise regulation changes
- Lease renewals at materially higher rates
- Franchisee disputes over pricing and value platforms
Leading indicators
- Franchisee profitability and reinvestment levels
- Occupancy cost trends and property impairments
- Systemwide sales and restaurant margin trends
Counterarguments
- Real estate control varies across markets and may be less pronounced where McDonald's is primarily a lessee
- Competitors can replicate franchising and site selection advantages in mature markets
Operational Excellence
Supply
Operational Excellence
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
Standardized operating system and global brand standards support consistent guest experience and throughput across diverse markets, enabling scaling of best practices.
Erosion risks
- Operational complexity from localized menus and regulations
- Labor constraints and wage inflation
- Technology execution risk (order accuracy, downtime)
Leading indicators
- Service speed and order accuracy metrics
- Restaurant-level labor turnover
- Comparable sales and traffic
Counterarguments
- Operational excellence is continually contested; top peers can match or exceed execution
- Consistency is harder as markets diversify and franchisee bases expand
International Developmental Licensed Markets & Corporate
Quick-service restaurants and informal eating out (IEO) with a focus on licensed and franchised system expansion
Revenue and operating income shares are computed from the FY2024 10-K segment table (IDL & Corporate revenues $2.661B; operating income $0.033B). The segment is reported as about 99% franchised at 2024-12-31 and includes Corporate activities.
Brand Trust
Demand
Brand Trust
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Brand strength is particularly important for attracting and retaining strong licensee partners and for enabling rapid scaling across diverse markets with local execution.
Erosion risks
- Brand damage in one major market spills globally
- Political instability and consumer nationalism
- Licensee execution failures reduce trust
Leading indicators
- Systemwide sales growth in key licensed markets
- Net new restaurant openings in developmental markets
- Brand sentiment and safety incidents by region
Counterarguments
- Local champions can outperform on cultural fit and pricing
- In some markets, Western fast food can be cyclical or politically exposed
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Developmental license and franchise agreements provide durable fee streams and structured governance; however, terms and enforceability vary across jurisdictions and partner quality matters.
Erosion risks
- Partner underinvestment reduces brand consistency
- Contract renegotiations under political and regulatory pressure
- FX and macro volatility in emerging markets
Leading indicators
- Licensee reinvestment levels and remodel cadence
- Regulatory and legal developments affecting franchising
- Royalty and rent collections and receivables quality
Counterarguments
- Long-term contracts do not guarantee unit economics; consumer demand still drives outcomes
- Governance leverage may be weaker where partners are large and politically connected
Physical Network Density
Supply
Physical Network Density
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
A very large global system footprint supports marketing efficiency and reinforces consumer habit, but density advantages can be uneven across markets depending on partner rollout and local competition.
Erosion risks
- Expansion slows if unit economics weaken
- Real estate scarcity in high-growth cities
- Competitive land-grab by local and global QSR rivals
Leading indicators
- Net restaurant additions in licensed markets
- Same-store sales and traffic
- New market entries and development pipeline
Counterarguments
- Density can be rapidly matched by well-capitalized local chains
- In some markets, delivery reduces the need for dense footprints
Evidence
of material importance
The 10-K states the McDonald's trademark and Golden Arches logo are material to the business, supporting brand-based advantage.
43,477 restaurants ... 95% franchised
The 10-K reports 43,477 restaurants at year-end 2024 and about 95% franchised, indicating a very large, scalable footprint.
control of the underlying real estate
The 10-K describes that at the end of a typical franchise term, McDonald's retains control of the underlying real estate and building, supporting site-level control and stability.
Global Brand Standards
The 10-K describes a standards-and-policies framework (including Global Brand Standards) supporting consistency across company-operated and franchised restaurants.
The filing describes McDonald's core trademarks as material assets, supporting brand-based advantage internationally.
Showing 5 of 11 sources.
Risks & Indicators
Erosion risks
- Brand damage from food safety, labor, or social controversies
- Shifts toward healthier food and away-from-burgers preferences
- Sustained value-perception decline from pricing and inflation
- Delivery aggregators reduce the advantage of proximity for some occasions
- Rising rent and labor costs pressure unit economics in dense markets
- Zoning and community resistance slows new unit growth
Leading indicators
- Comparable sales and guest counts
- Brand preference and value perception tracking
- Market share of visits vs key QSR peers
- Net restaurant additions and closures
- Delivery penetration and app-based order share
- Drive-thru times and service metrics
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.