At its investor day in December—McDonald’s first in three calendars—the company added a “fourth D” to its Accelerating the Arches strategy, which launched in 2020. “Development” joined “delivery,” “drive-thru,” and “digital.” While that might not appear groundbreaking for a chain with 40,000 units globally, the reality was McDonald’s hadn’t grown for some time in the U.S. Its net unit expansion of six stores last year marked the first domestic uptick in eight years. From 2020 to 2021, the brand retracted by 244 stores. The year earlier, it was 164.

Given McDonald’s ended 2023 with 13,449 U.S. restaurants, the numbers were relatively immaterial. But things quietly began to shift during the pandemic. There were anecdotes of McDonald’s grabbing sites from 2020–2023 as it prepared to ramp up, with franchisees suggesting there were as many as 250 new units in the pipeline. In particular, McDonald’s appeared to follow population trends to the South and Southeast.

The December announcement outlined a run rate of 1,000 gross openings across the U.S. and International Operated Markets in 2027 that will take McDonald’s from 40,275 or so locations to 50,000. Or 4–5 percent annual net new growth. Adding 9,000 restaurants will comprise 900 in the U.S., 1,900 in IOM (markets like France, Australia, and Canada), and 7,000 in the IDL (notably home to China).

MORE: McDonald’s Chris Kempczinski to Assume Combined Role of CEO and Chairman

It projects McDonald’s somewhere in the low-mid 14,000 range domestically.

CFO Ian Borden, speaking recently at the UBS Global Consumer and Retail Conference, said the brand anchored down in anticipation. Over the last decade, he said, the U.S. population grew 11 percent. McDonald’s? About 4 percent. “So we haven’t even kept up with population growth,” he said, “[and that’s] not even considering I think that our brand can penetrate in different ways, in more expansive ways, in some of the communities that we’re in. So I think that’s what gets us excited about the opportunity.”

McDonald’s wasn’t idle over the years. The chain invested $9 billion as a system to modernize its estate (what’s labeled the Experience of the Future). Back in August 2018, it announced, along with franchisees, it was planning to invest billions to modernize most of the U.S. footprint by 2020. This was well before anybody realized a global crisis would shutter dining rooms and labor and margin challenges would send brands toward omnichannel growth in the form of kiosks and digital connectivity. McDonald’s revamp included kiosks, remodeled counters for new table service, digital menuboards, designated parking spots for curbside pickup through mobile order and pay, and expanded counters and display cases. Full modernizations saw mid-single digit sales uplifts in the early days.

Borden said the U.S. today is 98 percent there. “And that may seem a greens fee, but there are lots of players in the industry that are nowhere near that,” he said. “Higher interest rates, businesses under pressure, I think, from a cash flow or earnings perspective. So if you were trying to do that now that would be incredibly harder to do in today’s context that it was when we brought that to life.”

Put differently, McDonald’s is happy it isn’t trying to update assets given the cost of doing so in the present climate. The unique, and somewhat fortuitous, fact it got ahead of the wave means it can do something most aren’t—tangibly grow. That’s as true of McDonald’s comping against McDonald’s in recent years as the rest of the industry.

This is also true from a standpoint of pulling digital levers already in place to satisfy changing consumer needs.

Borden said if you asked McDonald’s in 2020 about its digital outlay, the company wouldn’t have been pleased. “So we put a lot of focus in how do we bring digital to life at scale with an enterprise mindset?” Borden said.

“And I think the fact that we’re at 150 million loyalty members today across our top 50 markets is a pretty good indication of the progress that we’ve made in digital,” he added.

McDonald’s now boasts about $20 billion in systemwide sales to members (this includes the 70 million active loyalty users in China). The goal is to bump the pool to 250 million by 2027 and deliver $45 billion.

McDonald’s digital business mixed more than 40 percent of sales across its top six markets last quarter, equating to nearly $9 billion. The chain prepares 55,000 orders globally for delivery at any given moment, with guests able to order within McDonald’s app in five lead markets (the aim is to have 30 percent of delivery orders originate in the mobile app by 2027).

Just in the U.S., where the loyalty program landed in July 2021, the number of active users swelled north of 34 million. Borden said you’re only now starting to see McDonald’s ability to ignite at scale. “Obviously, we’re doing a lot of work around how we are starting to activate those relationships on a much, much more personal level, which I think will create a lot of value for consumers and us and we look forward,” he said.

At its investor day, McDonald’s spoke about how it was going to build three tech-enabled platforms in the business. It mentioned a consumer platform (loyalty). “And we want to have, by the end of 2027, one of the largest consumer platforms in any industry globally,” Borden said.

“Why is loyalty important?” he added later. “Loyalty is important because loyalty customers visit more frequently, and they spend more over time. And I would say, we’re seeing that already, very compellingly, but with what I would say is pretty basic capability today.”

Where is McDonald’s and loyalty headed? Borden said it will get to the point where the company has the capability to interact with guests in an intuitive way based on their individual data to “provide them what they want, when they want it, where they want it, how they want it.”

“And that will be powerful because it will continue to unlock more value for the consumer and it will continue to unlock more value for the organization,” Borden said. “And I think scale starts to unlock capabilities.”

Imagine partnerships with other brands and how that can become part of McDonald’s loyalty program. And the advantages McDonald’s has through sheer size and brand value. “I think of things like gamification where you can start to unlock a lot of value for consumers by having such a large platform, where you can start to bring capabilities to scale,” Borden said. “There’s a lot of work to do. That’s going to take time to get all of that capability in place. But I think that we’ve got a clear line of sight to where we want to get to and the road map on how we’re going to start bringing those capabilities to life.”

Next, McDonald’s referenced a restaurant platform. That was explained as having “the easiest and most efficient restaurant operating platform in our industry that brings all of the modern capabilities and technologies to our people and our restaurants,” Borden said, “and allows them to do their jobs more easily and efficiently and focus on delivering a better customer experience.”

He added McDonald’s would extend the Cloud to 40,000 restaurants worldwide as part of that effort. It builds on something the brand revealed earlier. McDonald’s in December announced a strategic partnership with Google Cloud to connect cloud technology and apply generative AI solutions across restaurants.

The broad idea is automation innovation from equipment manufacturers would get a boost, which in turn, allows GMs to quickly spot and enact solutions to reduce business disruptions. Additionally, the tech reduces complexity for crew and leads to hotter, fresher food.

To Borden’s point, McDonald’s wants to take Google Distribute Cloud, a combined hardware and software offering, and spread it to tens of thousands of restaurants. Operators will then be able to leverage cloud-based software applications and their own software and AI solutions locally on-site, as needed.

McDonald’s will be the largest global foodservice retailer to use Google Distributed Cloud’s new capabilities. Those “thousands” of restaurants are expected to begin receiving hardware and software upgrades next year.

A dedicated Google Cloud team in Chicago will also work near McDonald’s global innovation center, known as Speedee Labs.

That’s not the end of it, either. Starting this year, McDonald’s plans to deploy universal software for all customer and digital platforms to run on, from the mobile app to loyalty to in-store kiosks. The chain said it would enable faster innovation and more stable performance.

More shared data means more opportunity to accelerate customized AI solutions, McDonald’s said.

“We want to have a company platform that starts unlocking speed efficiency innovation … and brings our data and analytic capabilities to the scale of the enterprise that we have,” Borden said. “So when you think about those three platforms, that means we’re going to invest significantly over the next several years behind technology and digital. And we strongly believe that technology and digital are a scale game, meaning you are advantaged by scale. Why? Because we can invest more than anyone in our industry, because of our size and level of resource that we have.”

The state of the consumer and the “large burger”

One of the more flashing statements McDonald’s made in recent months came in early February. CEO Chris Kempczinski on the chain’s Q4 earnings tapped “that low-income consumer” as the next battleground for quick-serves. Namely, McDonald’s said it’s witnessed pressure with the cohort ($45,000 and under) and admitted the reality eating at home was becoming more affordable had eroded traffic in this category, which has long built the backbone of fast food across America—a segment that’s value in “bridge meals” and ability to win at the lower end of the barbell remains ingrained in culture more so than BLS statistics.

But headed into Q4, grocery and supermarket prices had declined for 16 straight months. Food-at-home’s consumer price index decreased 0.1 percent from November to December. Food-away-from home was 0.3 percent higher and 5.2 percent above year-over-year measures.

Borden said it’s a challenging environment. People are getting slapped by inflation across all areas of spend. Higher interest rates are factoring in as well. Specifically with lower-income guests, Borden said, there are a couple of additional dynamics at work. The COVID savings people drew from are “largely gone,” he said. And then, as Kempczinski highlighted, the food-at-home versus food-away-from home tug-of-war returned to historical norms. “Which means some of those consumers are just choosing to eat at home more often,” Borden said.

Yet, meanwhile, this happened as menu prices across the category climbed to combat inflation and, although slowing, are still significantly above where they were in 2019. Restaurant menu prices were up 0.1 percent in February and have hiked 4.5 percent over the past year. That number is 1 percent for food at home. Full service was 3.8 percent higher last month and quick service 5.2 percent.

“If you think of the informal eating-out sector, it’s certainly likely this year that we’re going to see negative traffic from a broad standpoint from an industry standpoint, because of those dynamics on a comparable basis,” Borden said.

He added McDonald’s remains confident in the positioning of its brand.

“We have a leading value for money a leading affordability positioning in the U.S. business,” Borden said. “But as we talked about earlier, what’s important I think is the landscape is more difficult, as it’s shifting is that you’re listening to the consumer and leaning into kind of what the consumer is expecting.”

This latter point created an interesting chasm. Borden said lower-income guests are expecting more affordable options that are greater value for money than they were previously. Looking at the domestic business, 90 percent of McDonald’s stateside restaurants today offer bundles at either breakfast or during the rest of the day at under a $4 price point.

It’s compelling value, Borden said, but something McDonald’s didn’t talk about actively headed into 2024. The brand wants to ensure consumers know what’s available and are thinking of McDonald’s when making value choices, he noted.

And not to be forgotten, there’s the digital lever of 34 million active loyalty members it can lean into instantaneously. “We’re going to be a lot more active in how we’re bringing digital to life, and the offers that we’re putting in front of consumers to make sure that we’re compelling,” Borden said.

“I mean, I think the headline is, we’re going to work really hard to make sure we continue to earn the right, and even those consumers, who I think are making more discerning choices, that we are working hard to earn those visits,” he said. “And then when those consumers are coming in, to make sure we’re delivering them a great experience, so they’re going to want to come back the next time that they can.”

Speaking of value and its ever-evolving makeup, McDonald’s core menu fuels 65 percent of its global systemwide sales. COVID, Borden said, reminded the brand of just that. It’s why the menu tightened, and focus shifted toward those $17 billion worth of equities (beef, chicken, and coffee).

McDonald’s is the largest global player in beef. Borden said the brand earned share since 2019 “pretty consistently” across all markets, yet there are some pulsing opportunities.

“Best Burger,” a platform that focuses on preparation and quality improvements, has been out to 70 markets. It’s going to flood the rest of the system by the end of 2026. Borden said it’s driving “significant improvements” in taste and quality, which are the two biggest drivers of consumer visits to restaurants.

Where an opportunity emerged, however, is with a “large burger.”

“It’s a good example of how I think we are more precisely understanding consumer need and then getting after that consumer need and I’ll call it a one-way approach,” Borden said.

In the past, McDonald’s went after whitespace with “premium burgers” because it thought that’s where the consumer wanted it to go. “Which was wrong,” Borden said. “And … we weren’t successful.”

A larger, more-satiating offering is what people are truly asking of McDonald’s. “That opportunity is significant,” he said. “it’s consistent across many of our large markets.”

McDonald’s hinted it’s innovated a couple of products in the pilot stage. It’s going to test them in two or three “market zeroes.” If they work, McDonald’s will scale one solution to that opportunity globally where, previously, you’d have seen it try and get after the runway in 20 different markets in 20 different ways, Borden said. “And then you don’t have the ability to build a global equity that you can drive at scale.”

Chicken is another bucket. McCrispy was originally tested in a few markets to solve an unmet customer need. From 2010 to 2023, according to the U.S. Department of Agriculture, annual consumption of chicken in the U.S. increased from 82.8 average pounds per capital to 101.7 (projection; it was 100.6 in 2022). Beef declined in that same window from 59.3 to 57.9.

Globally, chicken is twice the size of beef as a category.

And so, unsurprisingly, McDonald’s scaled quickly and McCrispy today is a $1 billion brand across over 30 markets worldwide. The chain’s chicken category now represents $25 billion in annual systemwide sales—on par with beef.

The chain plans to add another point of chicken share by 2026 through further McCripsy platform expansion into wraps and tenders. McSpicy is growing, too. “We believe we are under-indexed in our share of the market,” Borden said.

He also highlighted McDonald’s was not content with its progress in coffee, despite being the No. 2 player globally. “We have a significant share in coffee, but we haven’t made the progress as consistently as we believe we can,” Borden said. “And we believe the biggest opportunity is we’re not delivering consistent taste and quality execution. Again, taste and quality are those top two drivers of customer visits. Maybe a micro example of why we have 100 different coffee machines across our business today.”

It’s difficult to deliver consistent experience without streamlined preparation. “We’re going to bring that consistency to life at scale. And we believe by doing that we can deliver a significant impact on taste and quality for customers and deliver a better experience,” he added.