McDonald's Stock Puzzle: Why This Fast-Food Giant Stumbled While the Market Soared

McDonald’s (NYSE: MCD) delivered solid operational performance in 2025, yet its stock barely moved while the broader market celebrated. The question haunting investors: Is this a buying opportunity or a warning sign?

Strong Operations, Weak Stock Returns

The numbers tell a curious story. McDonald’s U.S. same-store sales grew 2.4% in Q3—impressive when the fast-food industry contracted by 1.1%. Globally, the growth looked even sharper at 3.6%. Yet while the S&P 500 surged 17% for the year, McDonald’s (NYSE: MCD) returned just 5%, underperforming by roughly three-fold.

On the industry front, McDonald’s crushed it. The AdvisorShares Restaurants ETF fell 7% during the same stretch, making the Golden Arches stand out. But that doesn’t soothe investors who felt left behind in the rally.

The Traffic Problem McDonald’s Can’t Ignore

CEO Christopher Kempczinski didn’t sugarcoat it during the recent earnings call. While U.S. same-store sales ticked positive, quick-service restaurant traffic collapsed by nearly double digits in Q3—a trend approaching two years. Meanwhile, higher-income customers were defecting at roughly the same rate.

The takeaway: McDonald’s faces a customer retention crisis among its price-sensitive base, a demographic that historically drives volume at the chain.

The McValue Counterattack

McDonald’s responded with urgency. The company rolled out its McValue platform, starting with September’s Extra Value Meals ($5 Sausage McMuffin with Egg, $8 Big Mac Meal), followed by additional offerings in November ($5 Sausage Egg and Cheese McGriddles Meal, $8 10-piece Chicken McNuggets Meal). Combined with the Daily Double announced earlier, this represents a coordinated assault on affordability perceptions.

Early signals are encouraging. International markets, where value deals have been battle-tested, contributed to strong performance outside the U.S. Critically, these promotions haven’t cannibalized profitability—total restaurant margin dollars climbed 4% year-over-year, topping $4 billion for the first time. Adjusted operating margins expanded to 47.2% from 46.7%.

An Expansion Like No Other

Here’s where the story gets compelling. McDonald’s committed to opening 10,000 new stores by 2027—roughly 25% growth in store count, the fastest in company history. As of Q3, it’s tracking toward its 2025 target of 1,800 net additions. With just over 44,000 locations today, the company is gunning for 50,000 globally within three years.

This aggressive expansion, combined with margin expansion, suggests management sees genuine opportunity ahead despite current headwinds.

Why the Stock Looks Cheap

McDonald’s (NYSE: MCD) trades at a price-to-earnings ratio of 26, roughly 10% below the S&P 500 average. The dividend yield sits at 2.5%, nearly double the market average. Management appears positioned to announce its 50th consecutive dividend increase this year, a milestone that would earn McDonald’s “Dividend King” status—achieved by only about 1 in 1,000 companies.

The Verdict

McDonald’s faces legitimate near-term headwinds—consumer pressure and macroeconomic uncertainty are real. But the combination of growing margins, robust dividend growth, and historic expansion paints a different long-term picture. The stock may continue underperforming if technology stocks dominate the market in 2026. However, for investors seeking both growth and income, McDonald’s (NYSE: MCD) appears attractively valued. The real test comes Feb. 9 when the company reports whether it hit its 2025 expansion goals.