ENVALITH
日本マクドナルドホールディングス株式会社 logo

McDonald's Holdings Company (Japan), Ltd.

2702・Standard Market・Retail Trade

Official website
日本マクドナルドホールディングス株式会社 logo
McDonald's Holdings Company (Japan), Ltd.2702

Business

McDonald's Holdings Company (Japan), Ltd. is a holding company that operates hamburger restaurants nationwide across Japan through both directly managed stores and franchises, via its wholly owned subsidiary McDonald's Company (Japan), Ltd. Since the opening of its first store in Ginza in 1971, the company has grown into a leading player in Japan's foodservice industry, and as of the end of December 2025, it operates a total of 3,025 stores, comprising 705 directly managed stores and 2,320 franchise stores. Under a master license agreement with McDonald's Corporation of the United States (through the end of 2030), the company uses the trademark and know-how, and develops its franchise business through sub-licensing to domestic franchisees. Its main customers are general consumers across a wide range of age groups, and it caters to diverse visit occasions through time-of-day menus such as Breakfast Menu and Yoru Mac (Night McDonald's), as well as digital ordering and delivery.

Business Model

Of net sales of ¥416,602 million, directly operated store sales accounted for ¥270,089 million (64.8%) and franchise income for ¥146,513 million (35.2%). Franchise income consists of royalties (3.0% of total store sales), rent royalties, advertising cost contributions (4.5%), and other items. While the cost-of-sales ratio for directly operated stores is 88.6%, the cost ratio for franchise income is lower at 61.9%, making the progress of franchising a structural factor behind margin improvement.

Company Strengths

Existing-store sales increased for 41 consecutive quarters from Q4 FY2015 to Q4 FY2025. FY2025 achieved a 5.7% year-on-year increase, with system-wide sales reaching a record ¥888,649 million. Even after price revisions, customer traffic was maintained through promotional measures, demonstrating a solid underlying demand base.

Franchise income grew strongly to ¥146,513 million (up ¥14,495 million, +11.0% year on year). By accelerating the conversion of company-operated stores to franchise stores (113 stores in the period), the proportion of franchise income, which carries a lower cost ratio, increased, improving the cost of sales ratio by 0.8 percentage points from 80.0% to 79.2%.

Operating cash flow for FY2025 was ¥53,240 million, maintaining a cash generation capacity roughly on par with operating profit of ¥53,257 million. The company held cash and deposits of ¥71,422 million on hand, funded capital expenditures of ¥43,780 million from its own funds, and paid dividends of ¥6,514 million, demonstrating sound financial health.

ENVALITH's Perspective

Q1 FY2026 operating profit of ¥16,640 million increased 39.3% year-on-year, a substantial gain. Progress against the full-year forecast of ¥54,500 million stands at a high 30.5%, partly aided by the timing effect of marketing investment (advertising expenses decreased ¥498 million year-on-year). The full-year forecast remains unchanged from the figures announced in February (net sales of ¥405,500 million, operating profit of ¥54,500 million), and given the possibility that marketing investment will increase toward the second half, achievement of the full-year forecast may currently appear conservatively set.

The price revision implemented on February 25, 2026 is believed to have contributed to the 7.3% increase in same-store sales. The cost of sales ratio for directly operated stores improved by 1.8 percentage points, from 88.5% to 86.6%; while the material cost ratio (37.3% → 37.7%) rose slightly, the labor cost ratio (26.0% → 24.8%) and other costs (25.2% → 24.1%) improved. As an external factor, upward pressure on food ingredient and labor costs continues, and the trend in the cost ratio once the price revision effect fades will be a key point to watch going forward.

Due to the reclassification of directly operated stores to franchised stores (27 stores in Q1 of the current fiscal year), directly operated store sales decreased by ¥2,512 million year-on-year, while franchise (FC) income increased by ¥5,264 million. Because FC income carries a higher profit margin, overall profitability has improved, but the contraction in directly operated store sales is a structural factor that constrains growth in consolidated net sales. This structural change is reflected in the full-year sales forecast being set at a 2.7% year-on-year decrease (¥405,500 million), suggesting a management policy that prioritizes improvement in profit margin and ROE over sales growth.

Growth Strategy

Targeting average annual systemwide sales growth of 4-6% through three areas: strengthening franchising, net store growth, and digital expansion

Accelerating the shift from company-operated to franchise stores to raise the proportion of higher-profitability franchise revenue. In Q1 of the current fiscal year, the franchise revenue cost ratio improved to 60.1% (63.9% in the same period last year). A mid-term target of operating margin of 13% and ROE of 11% or higher has been set.

Targeting a net increase of 100 or more stores over the three years from 2025. In Q1 of the current fiscal year, 21 new stores were opened, 15 stores were closed, and 39 stores were remodeled, bringing the total store count at quarter-end to 3,031 (up 6 stores from the previous fiscal year-end).

Expanding the channels through which points can be earned under "My McDonald's Reward" to include touch-panel kiosks, in-store counters, and drive-through. Combined with diverse sales channels such as mobile order and delivery, this aims to improve customer convenience and increase visit frequency.

Combining seasonal and collaboration products (such as the "Teriyaki Tamago Family" and "Dragon Quest Burger") with value initiatives such as "Toku ni Naru do" to attract a broad range of customers. Price revisions and menu renewals were also implemented in February 2026.

Expanding the coverage area of corporate PPAs, completing the introduction of strawless lids, and promoting the switch to 100% biomass-derived straws. Selected as a "Nadeshiko Brand" (Nadeshiko Meigara) in recognition of efforts to promote women's advancement (March 2026). Aiming to improve engagement among all employees, including approximately 220,000 crew members.

Last updated: July 17, 2026