Benzinga on $MCD (Nov 4, 2026)

Hello and welcome to McDonald's thirdarter 2026 investor conference call. At the request of McDonald's Corporation, this conference is being recorded.

In the third quarter, McDonald's delivered global comparable sales of 1 and a.5% and system sales growth of 4% in constant currency, reflecting the growing contribution from new restaurant openings.

Our international markets delivered another quarter of solid results supported by the continued strong execution across value, menu, and marketing in most of our largest markets, even amidst a continued challenging consumer environment.

In the US, performs improved as the quarter progressed with comparable sales turning positive in September following a slightly negative result in July and August. That improvement followed a series of interventions we initiated during the quarter.

Restoring some digital offers to drive frequency with our most engaged customers, shifting marketing support toward proven value platforms, and stepping up our focus on restaurant level execution.

We're encouraged by the initial response to those interventions and the direction of the business.

At the same time, we know there's more work to do. Our focus now is to build on that improvement and accelerate baseline performance. Specifically, that includes three additional interventions in the months ahead.

First, and most importantly, nailing the final piece of our value equation, entry-level offerings. Second, engaging our most frequent customers by stepping up compelling digital offers that give them more reasons to visit.

And third, reinforcing taste and quality credentials are our biggest equities, including system training on taste, quality, and great hospitality.

Just last week, we began an 8week test of two new everyday affordable price menu constructs across all day parts in about 1,900 restaurants across a handful of regions. We're testing mix and match bundles that give customers greater choice and provide familiar ordering behaviors for prior buy one add one offers.

We're also testing fixed bundles that give customers a set combination at an attractive price and make ordering straightforward.

At the same time, franchises representing about an additional 4,000 restaurants have chosen to move forward with similar entry-level bundles in advance of the formal test results.

Together, these restaurants and those participating in the formal test represent more than 40% of the US system, reflecting strong alignment around the opportunity.

We'll use the results of this test to determine which structure resonates most with customers, works best operationally, and delivers sustainable incremental traffic and sales for franchises.

Our goal is to launch a new program nationally in early 2027. We've already made significant improvements to address holistic value across our menu, which contributed to improvement in value and experience scores across our top 10 markets.

Today, our base menu pricing across the industry's most popular menu items in chicken, beef, and beverages is generally below that of our nearing competitors. Our five and $6 meal deals remain industry standouts, and our extra value meals on everyday fan favorites have become a proven platform to drive incremental sales.

And we provide a compelling broad set of digital offers to more than 45 million loyalty members in the US through the McDonald's app.

Our goal is straightforward. Customers should see a clear and compelling value proposition every time they consider McDonald's. Whether looking for an affordable individual item, a complete meal, or a digital offer in the mobile app.

In conclusion, we're exactly where we hope to be when we shared our comments regarding US performance at Investor Day. We're taking the right steps to improve our near-term performance in the US, and I'm encouraged by our baseline traffic trends in September and October.

At the same time, beverages continues to perform well and are contributing to incremental chef growth. In the third quarter, global comparable sales grew one and a half% in a soft consumer environment, particularly in Europe.

In spite of the environment, we continued to gain or hold share across the majority of our top markets.

Beginning with the US, comparable sales declined 0.2%. 2% for the quarter and are up 1.4% on a year-to-ate basis.

As Chris just highlighted, comp sales improved as the quarter progressed, turning positive in September as a result of steps we took during the quarter to begin to stabilize baseline guest counts.

One step was to partially restore a broader range of regional and national digital offers to drive higher frequency of visits from active loyalty members as well as to generate traffic from new and lapsed loyalty members.

Examples of these offers included a $2 breakfast sandwich and free fries with a $1 minimum purchase.

The initial responses to the mass digital offers exceeded expectations for both incremental guest counts and sales and helped to reverse the decline in baseline trends we saw in Q2 and early in Q3.

The second step was reallocating marketing support toward rest of day entry-level meal deals and extra value meals. Proven and compelling components of our value offerings.

Since relaunching EVMs more than a year ago, unit sales from our top EVMS are up about 7% versus the prior year. And we've consistently seen incremental traffic with higher average check and margin.

This trend continued late in the quarter behind nationally price pointed offerings including a $5 sausage McMuffin and egg meal and an $8 Big Mac meal. As Chris noted, the US is also testing additional entry-level value offerings which we expect to launch in early 2027 to complement these strong existing value programs.

Turning to menu, our new specialty beverage platform continued to perform well, delivering clear incrementality in the quarter behind strong take rates and repeat purchases across the assortment.

We continued to see checks that included a specialty beverage up about 50% compared to the full day average check with a majority of units sold after lunch. The addition of Red Bull Dragon Berry Energizer in August delivered a boost to the platform with minimal cannibalization of refreshers and crafted sodas.

During the 6 week advertised launch window, it sold the most units within the platform and lifted total specialty beverage category sales.

In short, for the US overall, we're encouraged by the initial response to the interventions we undertook to improve baseline trends and how the US system is acting together to strengthen business momentum as we exit the year.

Turning to the international operated markets, comparable sales increased 1.4% led by Australia and Germany and we gained or held share in most of our top markets.

M comparable sales decelerated slightly as compared to the second quarter. This primarily reflected the continued underperformance versus our expectations in France as well as the impact on restaurant operating hours from the recent escalation of the war in Ukraine.

Excluding these two factors, M comparable sales would have exceeded our expectation for the quarter as markets continued to execute our playbook of delivering everyday value, offering relevant menu innovation, and driving strong marketing.

Beginning with value, Australia expanded its MSmart platform with new pricing tiers for meal bundles that drove incremental sales and guest counts.

Germany and the UK strengthened their affordability platforms with a particular focus on families, including price pointed happy meal offers. Additional value initiatives such as the UK's Chicken McNuggets extra value meal add-on and Savers breakfast offers helped drive guest visits and strengthen value perceptions.

For menu innovation, the launch of specialty beverages in Australia early in July significantly exceeded expectations with strong take rates and contribution to sales. Australia delivered many of the business performance and demographic trends we've shared about this platform in other markets.

Specialty beverages also continued to deliver strong performance in Canada and Germany. Canada's launch of Red Bull Energizers in the quarter exceeded overall unit sales forecasts and was incremental to other specialty beverage sales.

In Germany, the platform featured its first specialty beverage LTO, the Italo Spritz, and continued to drive incremental guest counts, improve baseline momentum, and capture beverage market share in the quarter.

The performance across the US, Canada, Germany, and Australia reinforces our confidence that the specialty beverages can become a sustainable global growth platform under McDonald's next and be a key driver for our goal to capture an additional 1.5 percentage points of beverage market share by 2030.

We remain on track to launch specialty beverages across nearly all of our European markets by mid 2027 and across more international developmental licensed markets throughout 2027.

Beyond beverages, we continue to see solid momentum in another global growth platform under McDonald's next, large beef burgers. In Australia, the Quarter Pounder was again the center of innovation and marketing, featuring the Quarter Pounder Deluxe and Double Quarter Pounder Barbecue Bacon with the performance of both exceeding expectations.

And Australia's successful quarter pound innovation has confirmed the opportunity that we believe exists with this equity across other markets, which will be a focus area in 2027.

Germany also continued to build on the momentum of the Big Arch platform, featuring the Big Arch with Bacon and Big Tasty Bacon with performance beating expectations and supporting beef market share gains in the quarter.

The UK and Spain also featured Big Arch during their quarter, extending positive performance in the beef category to these markets.

Turning to marketing, as we highlighted our our investor day, menu heist is an example of how we're leveraging our global scale to offer customers a curated selection of international menu favorites at their local McDonald's restaurant to create customer excitement, drive guest visits, and keep the McDonald's brand at the center of the experience.

In both Germany and Canada, the campaign generated strong sales and guest count growth. Germany delivered one of its highest sales weeks ever in the market, supported by menu items such as M Mc Extreme bacon from Spain and Mcrispy Chili Honey from Canada.

And in the UK, menu heist launched at the end of September with early social media trends showing strong customer excitement.

While many of our major M markets delivered strong execution during the quarter, France continued to per perform below our expectations, which Chris will discuss in a few minutes.

Turning to the international developmental license markets, comparable sales increased 4.2%. With all geographic regions delivering positive comparable sales, Japan led the way, driven by strong execution across value, menu, and marketing and has now delivered 44 quarters of consecutive comp sales growth.

IDL's comparable sales growth was tempered by results in China as the near-term macro environment and consumer backdrop remained challenging. At the same time, the China team continued to drive operational efficiency which supported improved bottomline performance versus the prior year quarter.

Turning to the enterprise P&L, our topline performance drove adjusted earnings per share of $357, including a 1 cent headwind from foreign currency translation. On a constant currency basis, adjusted earnings per share increased 11% compared with the prior year quarter.

We currently estimate no impact of foreign currency translation on adjusted earnings per share for the fourth quarter versus the prior year based on current exchange rates. As always, this is directional guidance as rates will likely change.

In the third quarter, we generated nearly $4.2 billion in restaurant margins. Our year-to- date adjusted operating margin was 48.3% reflecting higher other operating income, including the benefit from our refranchising efforts, which led to higher gains on sale of restaurants.

We're making steady progress towards our goal of having 98% of our global restaurant portfolio franchised by 2028, having refranchised about 175 restaurants across the US and M so far this year.

SGNA expenses were 2% of systemwide sales in the quarter and we continue to expect SGNA as a percentage of systemwide sales for the full year to be approximately 2.2%. As we discussed at investor day, we expect the investments we've made in global systems, shared capabilities, and highquality enterprise data will begin contributing to improved efficiency on SGNA as a percentage of systemwide sales in 2027.

Turning to new unit growth, we remain disciplined in our development decisions as we continue to open restaurants only where we expect attractive long-term returns for both McDonald's and franchises.

We now expect 2500 gross restaurant openings globally this year, slightly below our target of 2,600, but remain on track for approximately 2100 net restaurant openings.

We now expect 2026 capital expenditures of about $3.7 billion, which is at the low end of our previously guided range of 3.7 to 3.9 billion, reflecting opening slightly fewer gross new restaurants in own markets, as well as the impact of foreign currency.

In summary, our third quarter results were consistent with the trajectory that we previously outlined for the US business alongside continued solid performance across most of our international business.

We're encouraged by the improvement in US baseline trends that we saw as the quarter progressed and remain focused on the further work to do to position the business for stronger, more consistent performance in 2027.

At the same time, we'll continue investing behind McDonald's next at scale to drive sustainable long-term growth and productivity.

Want to offer a quick word on France. Few weeks ago, our franchises in France voted in support of a well- definfined and holistic path forward, including simplifying the market's governance structure to enable greater flexibility and agility for our business moving forward.

This was a historic vote and I want to thank our franchises for their partnership to get the business back on track.

While we continue to face short-term disruptions to our business in France due to the recent protests, we're now better positioned to drive growth behind stronger marketing support and the right combination of innovation, value, and improved execution.

Six weeks ago, we hosted investor day here in Chicago to detail McDonald's next, our new long-term growth strategy. At its core, McDonald's next is all about how we improve the customer experience.

From the food we serve to the hospitality we offer, while making our restaurants easier to operate and more efficient, our ambition is simple. To be the first choice for more customers more often across the global system,

across the global system, our franchises, suppliers, and employees are now stepping up, exchanging ideas, sharing solutions, and providing feedback. That's how we get better and it demonstrates the power of our unique three-legged dual model.

While McDonald's next is a multi-year strategy, we're already putting elements of it into action. Our internal mantra is next is now.

In early October, on our founders day, also known as Ray Croc's birthday, we launched Make It Golden. Make it golden is the largest capability building initiative in our history, focusing on elevating the guest experience by delivering great tasting food and uniquely McDonald's hospitality.

We're giving restaurant teams the training and tools to create more of these moments more consistently and at scale. In the first month, we completed the first round of trainings for our key leaders and experts who are responsible for cascading Make It Golden across more than 18,000 restaurants in the first quarter.

We're also making great progress rolling out our new beverage platform. Today, nearly 18,000 restaurants across the US, Germany, Canada, and Australia are driving incrementality by giving customers new reasons to choose McDonald's.

We're on track to expand our specialty beverage platform to more than 7,000 additional restaurants across Europe by mid 2027. We've already begun setting up operational pilots for handbredded chicken in the US and Ireland as we work to elevate taste and quality in our fastest growing category.

In early 2027, we'll launch full advertised sales tests in about 100 restaurants in a couple US cities and a complete full national rollout across Ireland. We're starting to open remodel next restaurants across the globe with the first international restaurant opened in Poland a few weeks ago, followed shortly by Spain.

As we shared at investor day, we've reimagine the design of our restaurants to deliver a more appealing modern customer experience with new kitchen layouts and equipment to support future menu innovation and gold standard execution.

Alongside our new restaurant operating platform, ArchIchQ, we're on track to begin remodeling hundreds of US restaurants in 2027 as we ramp up to a global run rate in excess of 5,000 restaurants per year beginning in 2028.

And finally, we're expanding testing of Archie, our smart ordering system, across more drive-throughs in the US and Australia, where it's giving our crew more time to spend with our customers and make sure every order is delicious.

We expect Archery to be deployed across a majority of US restaurants by the end of 2027 with further pilots planned internationally through 2027. This is next in action. Strengthening how we operate today while building the growth platforms and capabilities that will position McDonald's to lead for the long term.

We'll continue to regularly update you on our progress and associated results behind key elements of next throughout 2027.

At McDonald's, nothing is real until it's real in the restaurants. As we close out 2026, we're focused on reestablishing momentum on our US business while expanding share gains across our international business.

I'm encouraged by our near-term progress and excited about the upside potential that McDonald's Next will unlock for our business in the years ahead.

I think there's very strong alignment around uh focusing on this entry level value as being the last piece of the value equation for us that we need to figure out. Uh, and as I made it mentioned in my prepared marks, I think that's why we already see that we've got uh, you know, about 40% of the US system uh, is doing some version of an entry-level value program.

Part of that's in testing. Uh part of that is franchises not wanting to wait for the test and actually get out uh and put entry level value in place already. So I I do think there's uh really good alignment around uh you know getting after the entry level value in the US as I've talked about before.

I think we're in good shape on the other elements of value.

And then as you uh regarding McDonald's next, you know, we're having a lot of different conversations with franchises. Um but broadly, are franchises aligned around improving the customer experience, taste, quality, hospitality?

100%. Are they aligned around going after uh making the restaurants easier to operate, more efficient? 100%.

Uh in our system, as you know, uh the conversations are always around the how. Um and so one of the things that I think is is so good about our system is now we're digging in and we've got teams uh particularly in the US working through each of these elements.

If you think about remodels uh there's you know franchises now who have a team who are going through line by line item by item on the remodel. Uh and I'm sure they're going to find opportunities.

They always do. Uh there's always a good conversation on that.

And so I would expect uh that you know as we get further into those conversations we're going to get to a remodel program that we all feel really good about. Uh and then on the other uh piece of this which I know there's been conversation around handbredded chicken is why we have the tests out there.

We've got two as or advertised sales tests uh in a couple of our cities uh in early 2027.

Uh I just happened to spend the last last week I was in Ireland for a couple days with franchises there going and visiting the restaurants as they prepare for hand breading.

So this is like this is where McDonald's folks just get super excited because now they're getting into the operational details. How do we make this work? What are the challenges?

Uh how do we make it better? And so I do feel uh overall good about uh where franchises are on next. I think they're appropriately digging into the how on those things. Um, and we'll share with you progress as we go through 2027.

you know I' I'd go to kind of what we said on the on the Q2 earnings call because I think everything that we're doing and and the results that we've seen in Q3 are all kind of conf confirmatory to what we outlined there which was that our focus was about how we got the US business in a stronger position as we exit uh 2026.

I think certainly we we feel really good about the work and the decisions that Sky and the US system collectively are putting into place. I think we're, as you heard us say in our upfront remarks, we're encouraged by the baseline traffic trends that we've seen through September and and now through October.

And I think we remain, you know, really confident that the US is on the right path to exit 26 in a in a stronger position. Um, I might just also touch on M because I that may I'm sure that's a question that's coming.

And I just would say with M, you know, I think as we outlined in in our opening remarks, um, you know, see in in the all most the majority of our large international markets were holding or gaining share.

Uh, it's a it's a soft consumer environment, but we're doing well and I think our international markets are very consistently executing that playbook playbook of menu marketing and value.

Um, and I think as we look forward to Q4, you [clears throat] know, I think the the kind of conditions that we saw in Q3, we expect to be largely consistent through the rest of the year.

Yeah, hi John. I think these are all things that right now uh those are the details that we dig into with franchises to figure out uh how we deliver this. What's the best way uh to go about uh improving the taste and quality of our our chicken uh offerings?

I I was in Ireland as I mentioned last week and one of the things that we're doing in there and we've got in in you know I'd say right now about 10 restaurants is looking at two items uh so strips and and a sandwich versus three items strip sandwich and and wings and getting good experience and feedback on that.

I think one of the things again it's 10 restaurants um but we're seeing that uh wings provides really strong incrementality again it's in those 10 restaurants it's really early um but that's an interesting learning

so I think we're we're in kind of the now how do we actually go about and execute this what are the challenges what are the issues uh and I think you know through that we're going to learn uh whether there's you know the operational complexity of wings or three items uh outweighs uh the benefits that you get with incrementality

maybe the only hook John just um I mean I think we've done a lot of work to understand kind of the we call it menu architecture but just looking at the kind of composition of the market and I mean obviously we're going to ultimately be led by what is what are customers looking for and I think as Chris said that may there may be some nuances markettomarket in that but we certainly have had success with wings in a number of markets uh globally and and so we certainly know it's it's an opportunity area.

Hey Sarah uh thanks for the question. I'll take the taste quality kind of the the pace question and then I'll let Ian uh cover the second one. Uh so yeah, as you noted uh we're focused on uh how do we go about assessing taste and quality?

It's a big part of what we're trying to upgrade the system on uh through the training that we've got here with with Make It Golden.

And I think probably the most notable change that we're making here is really uh enhancing the customer feedback portion of this. Uh so the core elements of of how we assess restaurants from a food safety standpoint, uh what we're doing around uh you know, making sure that we're we're doing the right things for our crew. uh all of those uh stay the same, but we have changed how we're going to be assessing uh customer satisfaction.

We're rolling out uh in Q4 a new approach there uh across the US. It's on the way to going uh global. And then we're also at the end of Q4 going to be introducing uh into the app where the customers now going to be able to give us a review uh within the app on their experience.

So all of that is going to go to giving us much better insight into how the customer is actually perceiving uh the experience that they're getting in the restaurants.

And when it comes to taste and quality, what ultimately matters is how the customer perceives it. So for us to be able to move the needle on taste and quality, it's beauty is in the eye of the beholder, which is going to be the customer.

Uh and we're making significant enhancements there to improve our visibility uh and the accuracy of the feedback that we're getting. Morning Sarah Ian. Uh so let me maybe just touch on your uh question on gains.

I mean I think as we as we talked about kind of in the opening uh comments I mean gains are obviously up this year that's as as you know part of kind of the next strategy of getting us by end of 28 to 98% franchised globally.

uh we've I think it's been about 175 restaurants so far in 26 through US and M segments that have been refranchised um and I would expect that kind of level of activity to kind of carry forward in in in through the next couple of years

obviously as you know in the model that has an impact on revenue which is one of the reasons why our revenue was a bit down in in Q3 because we moved that 100% uh revenue to obviously a franchise contribution of revenue venue.

Um, so I think looking forward, we feel really confident about the path to kind of get us to the objective of of 98% by end of 28.

we're seeing we're we know it's resonating with the kind of key consumers that are in the category in the general marketplace. Um, for sure, uh, like I think any part of the menu, consumers want some of that kind of new news.

I mean, you got to start though with the fundamental that the goal is to deliver great tasting, high quality everyday choice that appeals to consumers. Uh, and delivering that, which I think is what our unique proposition is, is is great value for money relative to what's available in other parts of the market.

And I think our foundational layer is doing that really well.

As I talked about in kind of my opening remarks, um we are starting to rotate some new news. Um Germany did that in the quarter with what they called their spritz, which was their best performing beverage in the portfolio in the quarter.

So we know new news is going to be important. Obviously, we just want to make sure we're doing that at the right pace while continuing to kind of invest in the underlying platform.

As far as cannibalization, I mean, of course, there's going to be some element of cannibalization, like anytime you're kind of adding incremental uh options to the menu, but I think what we're trying to really emphasize is there is clear incrementality.

We know beverages are driving incremental visits and incremental uh sales for restaurants and ultimately that means of course in incremental profitability for the franchises and for the restaurants.

So th it's all of those things together that are getting us uh you know more even more convicted about the opportunity and the fact that we're seeing that consistently in each market that's bringing the opportunity to life.

The only thing I would add uh I think Ian covered that really well but as you think about long-term we do think that there's an opportunity and a need for us uh to offer offer an even broader assortment of beverages.

And part of what is uh inherent in the next remodels is we just need to increase space for beverages. We don't have adequate space in back of house uh to be able to offer kind of our ami full ambition of what we want to do in beverages.

And so part of that actually one of the most significant uh investments associated with the next remodel is actually increasing what we call the beverage cell uh to give ourselves the platform to offer that broader variety of beverages going forward.

Yeah. Uh sure Andy. Well, we would agree uh the marketing is has not been uh where you know we would set the standard at uh for McDonald's. And so uh that's certainly something that Sky and the team are getting after.

And I feel good about uh some of the initial thinking that I've seen there and and more to come on that. uh we talked a lot about it at uh investor day as you know uh consumer next and how we're thinking about uh changing our go to market approach changing our demand generation approach uh and really emphasizing and leveraging the fact that McDonald's is one of the the world's biggest uh global brands and we can generate talk value uh that few other brands do and and we haven't in my estimation and I know uh Morgan would share this as well we haven't done uh as much as we could to harness that uh and really channel it into driving uh brand love for us.

And so that is going to be something uh that you're going to see us doing increasingly over the next several years.

Sure. Well, uh, we're always in conversations with franchises around pricing and and I think largely focused on the US right now, but largely we're in a good spot with the exception of this entry level value.

So uh our base menu pricing as we compare and benchmark versus our competitors within the trading area uh we are at a discount uh in the vast majority of our restaurants in the US on base menu pricing.

So we feel good about that. Uh as I mentioned we feel really good about where we are uh with our our meal bundles and other elements. So uh I don't think we have a problem uh in the US now.

You always have to stay vigilant on it and uh it's a dynamic environment. So, we're going to constantly keep looking at it, but uh we're starting from a good position on that.

As you think about 2027, certainly we're still expecting to see mid-s singledigit food and paper inflation. And uh that is higher than, as you know, our long-term uh historical trends there.

And so it is going to continue to be uh a sort of a needle that we're going to have to thread of how do we make sure that we're getting pricing through uh to account for the inflation that we're seeing but also make sure that we continue to lead with customers are offering great value and affordability.

Yeah, morning Brian. It's Ian. Let me start and then uh I'm sure Chris may want to weigh in. I mean, I think uh you're right. We [clears throat] talked about a number of areas of intervention uh through Q3 and and one of those was to partially restore uh national digital offers which are really really important for our high frequent users, our loyalty members.

Um, I think so. I think that was certainly one of the things that contributed to the improvement in our baseline traffic momentum that we talked about, but we also said we've got more work to do, and that's certainly what Sky and and the US system are focused on through the rest of the year.

I mean, our loyalty membership in uh the US is is is almost 30% of our customer base. So, it's a really important part. It's a part of our customer base that uh we interact with on a very regular basis.

And as we've talked about before, you know, um the frequency of that uh loyalty base is is much higher as as members get into loyalty. In fact, it goes up about two and a half uh times uh in the 12 months post joining the loyalty program.

So connecting with those customers and getting offers in place that resonate with them and are clear and compelling is really important and and as as I said we've made progress but we've but we've got uh more work to do on that front that the US system is is working through.

Yeah, I would just add uh I think digital offers is important particularly because digital offers go out goes after our most frequent customers and uh if you think about our business uh we've got about a third of our sales are digital sales.

Uh a significant portion of those are app-based which are our loyalty members. Uh and those frequent customers represent the majority of our sales. uh the occasional customer uh while important uh the occasional customer is not as meaningful from a sales contribution as that frequent customer.

That frequent customer is super sensitive to uh to digital offers. And uh I think what we learned there is uh we've got to make that right. And when you uh perhaps uh change key elements of the digital offer program that were really valued by the frequent customer, the impact on that can be pretty significant.

And so, uh, what Sky and the team have been able to do is go back, uh, and really address some of the biggest, uh, areas that, uh, needed to be put back in place. Uh, and then we're also continuing with franchises to talk about other areas, uh, within digital that we make sure that we're rewarding those frequent customers uh, and keeping them coming back to McDonald's.

Sure. Well, within China, definitely there's been a pullback uh by the third party uh delivery providers and we had a a odd situation in China where it was actually cheaper for a period of time to order delivery than it was by going to the restaurant which is uh requires a significant amount of subsidization that was going in by the third party delivery uh providers.

Uh that has reversed out. they've pulled back on a lot of those offers and so uh that has uh negatively impacted traffic uh in in broader market in China and certainly it has impacted us uh delivery globally though is still growing it's still growing kind of call it mid to high single digits uh and we're seeing I think you know strong performance for ourselves uh in delivery because of our size because of the proximity of our restaurants to customers we our preferred venue for those 3P uh 3PO uh providers.

And so uh we're we're still feeling good about our delivery business. We feel good about the share gains that we're seeing uh in delivery. Um but I think as cost of living pressures continue to be uh a source of concern.

Uh it's also incumbent upon us as well as the delivery providers to make sure that uh you know we're we're being thoughtful about uh the search charge or the the incremental uh price that gets offered there.

So there's a lot of conversations on that but delivery is still broadly growing.

Yeah, thanks Chris. Uh so on the first uh question which is around uh where you're I I'll actually hit the second question which is around conversation with franchises on pricing.

Uh we've actually had leadership franchises uh at headquarters uh this week talking about that exact uh thing. And uh I I think there's uh broad alignment around it's important for us in this environment to continue to make sure that we've got the right value program uh in place.

And so uh that's why we've got the entry level value testing. I don't think see there's any wavering uh in terms of the commitment for us to get that right. Uh and it's now just going through the how of of that we go do that.

And then in terms of how that plays out in 2027 when you've got uh you know the mid-s singledigit food and paper inflation which is what we are seeing uh is just going to require us to continue to be nimble there.

And I think there are we've got through our RGM team I think much better insight and clarity around those key value items, the ones that we've got to get right from pricing uh and those areas where perhaps we have opportunities uh to be able to push through a little bit of pricing.

So it varies restaurant to restaurant, operator by operator. Um we are going to find ways to go try to push that through. Um but um but I think we've just got to be really careful and I think we've learned the lesson over the last 18 months uh that you need to proceed very cautiously uh with that and I think we're align with franchises on that.

Uh your question around cash flows and where that stands. I don't have the latest number. Uh but I think you know we're broadly in line with where uh we talked about certainly part of that uh is going to be where we land in Q4 that's going to influence the final year number.

But uh I think you know we're right around that 500 and and whether we're you know slightly above or below that I think we still got a quarter to go.

The only maybe thing I'd add Chris to Chris's comments is I mean at the end of the day the most important thing for us to do uh to drive bottom line results both for our franchises and for us is is get the momentum of the business back where we we want it to be.

And I would just say I think that's what our US system is is focused on for the rest of this year as we've talked about. And I know they're deep in kind of working through their 27 plan and the focus is how do we get the the strongest possible topline growth in the environment that we're operating in.

Obviously that doesn't mean of course we don't take uh pricing or franchises don't make decisions to take pricing but the best thing for us to do is get the baseline of our business back into the spot where we want it to be and and uh that then helps us look after the rest.