McDonald’s warned that weak customer traffic across its major markets could persist as long as inflation remains elevated, adding to concerns that the fast-food giant’s turnaround will take longer to deliver results and sending its shares down as much as 6.5% on Wednesday.

The warning came as McDonald’s unveiled an $8.5 billion, decade-long support package for franchisees and provided its first detailed roadmap for its “NEXT” strategy, a broad effort to restore sales growth by improving value, food quality, restaurant operations and customer experience.

The market reaction showed the difficulty facing Chief Executive Chris Kempczinski and newly appointed US business president Skye Anderson. McDonald’s is attempting to invest heavily in its restaurants and strengthen its value proposition at a time when consumers remain under pressure from higher prices and restaurant competition has intensified.

McDonald’s shares fell to $234.03, their lowest level in nearly four years, before recovering some ground. The stock is now down about 22% this year.

The latest warning also suggests that McDonald’s does not expect a rapid recovery in industry traffic.

“We expect industry traffic growth in our wholly owned markets will be flat while inflation remains elevated,” Kempczinski said during an investor meeting. “The winners will be the companies that create more demand and deliver it more efficiently.”

That puts greater emphasis on McDonald’s ability to take market share rather than simply wait for consumers to return as inflation moderates.

The company’s immediate problem is traffic. US visits have declined year over year in every complete month since March, according to estimates from data analytics firm Placer.ai. McDonald’s is therefore dealing with a demand problem as well as an execution problem.

Last month, the company reported weaker-than-expected US sales growth for the second quarter, with management citing execution missteps that limited its ability to win back lower-income customers who had reduced spending on dining out.

Anderson acknowledged those shortcomings on Wednesday, saying McDonald’s had fallen short on “consistent execution” and needed to improve restaurant operations.

The challenge is that many of the changes required to address those weaknesses will take time and substantial investment.

McDonald’s Asks Franchisees To Fund The Turnaround

A central component of NEXT is a major push to upgrade McDonald’s restaurants. The company has outlined new restaurant designs, operational changes, employee training, and technology investments intended to make locations more productive and improve the customer experience. But much of that transformation ultimately depends on franchisees, who operate the vast majority of McDonald’s restaurants and bear significant costs associated with remodels and other upgrades.

The company estimates that remodeling and other NEXT-related improvements could cost at least $1.2 million for an average US location. McDonald’s will provide some assistance, including rent relief, but the support package does not cover the full cost of restaurant remodels.

“It’s a big commitment for franchisees,” said Jake Dollarhide, a McDonald’s investor and CEO of Longbow Asset Management.

McDonald’s plans to deploy about $5 billion of its $8.5 billion support package by 2030 through rent relief and capital support for franchisees. The scale of the package underscores the importance of franchisee participation to the turnaround. McDonald’s has already encountered resistance over rising costs and concerns about franchisees having less control over their businesses.

Those tensions became visible in August when executives said implementation of the company’s under-$3 menu was hurt because roughly one-third of franchisees did not participate.

For McDonald’s, inconsistent participation creates a particularly difficult problem. A national strategy only works if customers encounter broadly similar pricing, promotions, restaurant standards and service across the system.

Dollarhide said he has been closely watching franchisee relations because insufficient buy-in could undermine execution of NEXT.

The company is attempting to address that risk by linking the franchisee support package to improvements in restaurant economics. McDonald’s expects the strategy to increase restaurant-level efficiency by 250 basis points and generate roughly $100,000 in additional annual cash flow for the average US restaurant. That would give franchisees a financial incentive to support the investment cycle, although the timing and scale of those returns remain important variables.

McDonald’s is targeting restaurant-level operating margins in the low- to mid-50% range by 2030 and expects restaurant expansion to contribute about 2.5% of systemwide sales growth in 2027 and approximately 2% by 2030.

McDonald’s Tries to Compete Beyond Cheap Meals

The company’s problem extends beyond pricing. McDonald’s has traditionally relied heavily on value to drive traffic, particularly when consumers are under financial pressure. But the company now faces competition from fast-food chains and other restaurants that are also using discounts and value menus to attract cost-conscious customers.

That makes permanent dependence on promotions difficult. Discounts can increase visits, but they can also pressure restaurant economics and train consumers to wait for deals.

“Consumers are making choices based on more than price, and McDonald’s needs to give them reasons to visit beyond a deal,” said eMarketer analyst Suzy Davidkhanian.

NEXT is designed around that idea. The programme focuses on food quality, hospitality, value and innovation, while seeking to simplify restaurant operations and modernize the physical locations.

McDonald’s is also adapting its menu to changing consumer preferences. Anderson said the company is exploring higher-protein offerings and greater portion flexibility for consumers using GLP-1 medications. The potential additions include bowls, grilled chicken and egg bites, giving the company more protein-focused choices across breakfast, lunch and dinner.

The menu changes are an attempt to broaden McDonald’s appeal rather than compete exclusively on burgers, fries and low prices. They also reflect a wider shift in consumer demand toward higher-protein meals and more flexible portion sizes.

Technology is another part of the effort.

McDonald’s plans to expand the use of ArchIQ, its AI-powered restaurant operating system, which can automate tasks including drive-thru ordering. The broader objective is to improve restaurant productivity while simplifying operations for employees.

The technology investment could become particularly important as McDonald’s attempts to generate better economics from existing locations. If automation can reduce friction and improve order accuracy or speed, the benefits could potentially appear in both customer satisfaction and restaurant-level costs.

But technology cannot solve the underlying demand problem on its own. McDonald’s still needs customers to choose its restaurants, and the company’s own traffic data shows that problem remains unresolved.

The Turnaround Faces A Long Road

McDonald’s is effectively asking investors and franchisees to accept a prolonged investment cycle while the company works through weaker consumer demand.

Dollarhide compared the process with Starbucks, noting that the coffee chain’s turnaround took close to a year before investments began translating into stronger sales.

“Look at Starbucks, these changes don’t happen overnight,” Dollarhide said.

The comparison captures the central issue confronting McDonald’s. The company has considerable financial resources and a globally recognized brand, but changing restaurant operations, remodeling locations, improving service and rebuilding consumer traffic cannot be accomplished through a single promotion or menu launch.

The timing is difficult because inflation is still influencing consumer behavior. McDonald’s expects industry traffic to remain flat in its wholly owned markets while inflation remains elevated, meaning the company cannot count on an expanding overall customer pool to lift sales.

Instead, NEXT is built around taking a larger share of existing demand, increasing spending per visit and improving restaurant productivity.

That makes execution critical.

If franchisees resist the required investments, the strategy could be implemented unevenly. If consumers remain focused primarily on price, investments in restaurant design and menu innovation may take longer to produce higher traffic. And if inflation continues to squeeze lower-income households, McDonald’s could face continued pressure to offer discounts even as it tries to improve margins.

The $8.5 billion commitment therefore represents more than a financial investment. It is a test of whether McDonald’s can align corporate management, franchisees, technology and menu development around a common turnaround plan while consumers remain cautious.

For investors, Wednesday’s selloff shows that the market is looking beyond the size of the investment package and toward evidence that the strategy can actually reverse declining traffic.

McDonald’s has set a 2030 horizon for the transformation. The immediate test, however, is whether the company can restore visits to its US restaurants while maintaining franchisee economics and avoiding an increasingly expensive dependence on discounts.

Until that happens, NEXT remains a long-term restructuring effort rather than a quick fix for the traffic weakness currently weighing on the world’s largest fast-food chain.

Volkswagen has opened presales of its second electric vehicle developed jointly with Chinese EV maker Xpeng, accelerating its push to rebuild competitiveness in the world’s largest electric-car market as falling sales and shrinking margins deepen the German automaker’s China crisis.

The new ID. UNYX 09 electric fastback sedan, unveiled on Thursday, is the latest product under Volkswagen’s “in China, for China” strategy, which is designed to shorten development cycles, localize technology and respond more quickly to Chinese consumers.

Priced from 199,900 yuan ($29,785) in presales, the mid- to large-size electric coupe will officially go on sale at the end of October. Volkswagen says the vehicle was developed and brought into production in just 24 months, roughly 30% faster than its previous development cycles, using a new China-based architecture.

That speed has become important for Volkswagen in a market where domestic automakers are introducing new electric models at a pace that traditional global manufacturers have struggled to match.

Volkswagen’s deliveries in China fell 26% in the first half of 2026 to 971,000 vehicles, the lowest level in 16 years, according to company data released in July. The company acknowledged that it had been “unable to escape” the significant decline in the Chinese market.

The deterioration has transformed China’s role for Volkswagen from a major source of global sales and profits into one of its most pressing competitive challenges.

The company is facing simultaneous pressure from weaker overall demand and a structural shift in consumer preferences toward Chinese electric and plug-in hybrid brands. Companies such as BYD and Geely have expanded rapidly while competing aggressively on price, software, battery technology and intelligent-driving features.

Volkswagen’s response has been to change how it develops vehicles for China.

The partnership with Xpeng is at the center of that effort. Volkswagen acquired a 5% stake in Xpeng in 2023 and has since increasingly integrated the Chinese company’s technology into its local product strategy.

The ID. UNYX 09 follows the ID. UNYX 08 SUV, the first vehicle produced under the partnership, which launched earlier this year. The new sedan uses batteries supplied by China’s CATL and Xpeng’s VLA intelligent-driving assistance system. It will be manufactured at Volkswagen’s Hefei plant, west of Shanghai, where the ID. UNYX 08 is also produced.

The significance of the partnership extends beyond the individual vehicles. Volkswagen is effectively combining its manufacturing scale, brand recognition, and global engineering capabilities with a Chinese technology company’s development speed and understanding of the domestic EV market. That represents a substantial change for a company whose traditional competitive advantage was built around global vehicle platforms developed over long product cycles.

China’s EV market has made those cycles increasingly difficult to sustain.

Domestic manufacturers have compressed the time between product development and launch while continuously updating software and vehicle features. Consumers are also increasingly evaluating cars as technology products, putting greater emphasis on digital interfaces, assisted driving, connectivity and battery performance alongside conventional measures such as styling and driving dynamics.

Volkswagen’s decision to bring the ID. UNYX 09 from development to production in about two years is therefore as much a response to China’s changing competitive environment as it is an engineering achievement.

The company’s new China architecture is intended to make that acceleration repeatable.

Volkswagen plans to launch more than 20 battery-electric and plug-in hybrid models in China this year. The breadth of that programme reflects the scale of the market-share challenge. A single successful model is unlikely to reverse the company’s position in a market where Chinese brands now have much stronger positions across a wide range of price segments.

The pressure hits differently because China has historically been one of Volkswagen’s most important markets. The company built its position there over decades through partnerships with local manufacturers and a broad portfolio of combustion-engine vehicles.

The transition to electric vehicles has disrupted that advantage.

The current contraction in China’s automotive market has also made the environment more difficult. Volkswagen’s China chief said this week that the scale of the downturn was comparable to the impact of the COVID-19 pandemic.

But the current challenge differs from the pandemic shock because it is not simply a temporary disruption to vehicle demand. The industry is undergoing a structural shift in which domestic manufacturers have gained technology, scale, and consumer loyalty in areas where foreign automakers previously held strong positions.

That makes Volkswagen’s partnership with Xpeng particularly important.

Xpeng itself is seeking to expand beyond the Volkswagen relationship. Reuters reported this month that the Chinese EV maker plans to offer its technology to other foreign automakers, potentially turning the company from a domestic vehicle manufacturer into a broader supplier of automotive intelligence and software.

For Volkswagen, that creates both an opportunity and a potential competitive complication.

The opportunity is access to technology that can help it close the development and software gap with Chinese rivals. But if Xpeng supplies similar systems to other international automakers, the technology may become less of a unique Volkswagen advantage.

The longer-term value of the partnership will therefore depend on how effectively Volkswagen integrates Xpeng’s technology into a broader product and development system rather than simply using the Chinese company as an external technology provider.

The ID. UNYX 09 also exposes the blurred boundaries between automakers and technology companies in China’s EV market. Volkswagen brings manufacturing capacity, global procurement, and a large existing customer base, while Xpeng contributes software and intelligent-driving capabilities and CATL supplies batteries.

The result is a vehicle whose technology stack is substantially Chinese even though it carries one of Europe’s most recognizable automotive brands. That could become a common model for foreign automakers trying to remain competitive in China.

Volkswagen’s immediate objective is to stop the deterioration in a market where its sales have fallen to a 16-year low. Its longer-term objective is more difficult: to rebuild relevance among Chinese consumers who have become accustomed to faster product cycles and increasingly sophisticated domestic EVs.

The ID. UNYX 09 gives Volkswagen another product with which to make that case, but the scale of its sales decline means the company will need far more than a handful of new models. Its partnership with Xpeng is considered an ultimate bet that speed and localization can help Volkswagen recover some of the competitive ground it has lost.