MCD vs. YUM: Which Restaurant Stock is Better Positioned Now?

McDonald’s Corporation MCD and Yum! Brands, Inc. YUM are two global powerhouses in the quick-service restaurant industry. Both companies operate extensive international networks and primarily use a franchised business model. In recent years, both McDonald’s and Yum! Brands have prioritized digital innovation and global expansion as key strategies to drive growth and enhance customer engagement.

The broader restaurant industry continues to gain from higher menu pricing, average check growth and aggressive expansion. Both companies are also seeing positive momentum from strategic partnerships with third-party delivery services and ongoing digital transformation.

That said, there are a few challenges that affect the companies. Elevated labor costs and persistent food inflation are squeezing margins. Additionally, inflation-driven menu price hikes are beginning to impact customer traffic in certain segments.

Given the current mix of industry tailwinds and headwinds, which stock, McDonald’s or Yum! Brands, offers the better value for investors today? Let us take a closer look to find out.

The Case for MCD

The company's strong record of innovation, leadership and adaptability continues to position it for success, even amid challenging market conditions. McDonald’s is the world’s largest chain of fast-food restaurants, with a presence in more than 100 countries. Its offerings have reached the billion-dollar brand status through sustained product innovation and geographic expansion.

The company is also focusing on expansion efforts. McDonald’s plans to open 2,200 restaurants globally in 2025. McDonald’s expects to open 600 restaurants in the United States and international operated markets. MCD also plans to open more than 1,600 restaurants in the International Developmental Licensed segment, including 1,000 in China. It aims to open 50,000 restaurants by 2027.

McDonald’s is focused on menu innovation to drive growth, emphasizing its core billion-dollar brands and expanding affordable offerings. In 2025, it launched the McValue platform in the United States, and introduced everyday affordable price menus and value bundles in key international markets, including Canada. The company also debuted McCrispy Chicken Strips nationwide and is testing new beverages inspired by CosMc’s. With McCrispy now in 70 markets and a new chicken item planned for 2026, McDonald’s continues to strengthen its global chicken portfolio and value-driven menu strategy.

Ever since the launch of the loyalty program in the United States, MCD has been able to transform its offerings across drive-thru, takeaway, delivery, curbside pick-up and dine-in. The company has already introduced a loyalty program in more than 60 markets, including the United States, Germany, Canada, the U.K., Australia and France.

With increased digital adoption, the company is optimistic about its loyalty members’ growth trend. Since the launch of its loyalty program, the total number of 90-day active users has reached more than 170 million. Furthermore, in 2024, the system-wide sales to loyalty members were about $30 billion. It anticipates reaching 90-day active users to 250 million with $45 billion in annual loyalty system-wide sales by the end of 2027.

The Case for YUM

YUM! Brands is gaining traction with its next-generation growth initiatives aimed at capturing evolving consumer preferences. YUM’s “easy operations” pillar is focused on streamlining restaurant operations and empowering team members. In the first quarter 2025, the company extended its Byte Restaurant Coach tool to an additional 5,000 stores. This digital platform supports consistent and scalable performance management through routine tools and training. 

Meanwhile, Taco Bell U.S. onboarded 1,500 more restaurants to the Byte Back of House platform, raising the total to 3,000 stores. This progress marks a step forward in developing a fully connected kitchen ecosystem aimed at enhancing efficiency and enabling data-driven operational decisions. YUM plans for full system-wide adoption in 2025.

YUM! Brands reported steady progress in global development in the first quarter, with 751 store openings across 68 countries. KFC led the development effort, opening 528 units — the second-highest first-quarter total in the brand’s history — driven by strong performance in key markets such as China, India, Japan and Thailand. With a global average payback period of less than five years, and even more attractive returns in China, Thailand and the Middle East, KFC continues to be a cornerstone of YUM's expansion strategy.

Meanwhile, Pizza Hut added 198 stores in 34 markets, and Taco Bell posted 24 gross openings. Though Taco Bell's net unit growth was affected by strategic closures in Malaysia and China’s Tier 2 cities, the brand remains on track to achieve 100 net international openings in 2025, with momentum strongest in the U.K., Spain and India.

The company is also gaining from robust comps growth. In the first quarter of 2025, worldwide comps at Yum! Brands increased 3% year over year compared with a 1% rise in the previous quarter. The improvement was fueled by robust growth across multiple international markets, including a 13% comp increase in Korea, 8% in Africa and 6% in Canada, aided by localized innovation and value-led promotions.

YUM aims to drive comp growth in 2025 through deeper market penetration and an expanded range of offerings like tenders, nuggets, twisters and sandwiches.

How Does Zacks Consensus Estimate Compare for MCD & YUM?

The Zacks Consensus Estimate for McDonald’s 2025 sales and EPS implies year-over-year growth of 1.6% and 4.4%, respectively. Earnings estimates for 2025 have witnessed upward revisions of 0.2% in the past 30 days.

The Zacks Consensus Estimate for Yum! Brands’ 2025 sales implies a year-over-year increase of 6.8% and the same for EPS indicates a gain of 9.7%. Earnings estimates for 2025 have witnessed upward revisions of 0.3% in the past 30 days.

Price Performance & Valuation

The MCD stock has gained 7.6% in the year-to-date period compared with the industry and the S&P 500's 0.5% growth and 0.3% decline, respectively. Conversely, YUM shares have risen 7.4% in the same time frame.

Price Performance

MCD is trading at a forward 12-month price-to-earnings ratio of 24.69X, above its median of 23.72X over the last year. YUM’s forward earnings multiple is 22.99X, slightly below its median of 22.68X over the same time frame.

Conclusion

Yum! Brands appears slightly ahead of McDonald’s at the moment due to its stronger expected earnings and sales growth trajectory, driven by aggressive global expansion, faster same-store sales growth across key international markets, and deeper digital integration in operations.

While McDonald’s remains a solid performer with robust loyalty engagement and expansion plans, YUM’s more dynamic international development, broader innovation pipeline and higher earnings momentum suggest that it is currently executing more effectively on growth opportunities.

Both YUM and MCD currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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