What caused McDonald's expense ratio shifts in 2024?

McDonald's expense ratio experienced shifts in 2024 due to several factors:

1. **Inflationary Pressures**: McDonald's faced increased costs due to inflation, which impacted its margins. This led to higher operating costs and expenses, affecting the expense ratio.
2. **Royalty and Lease Payments**: As a company with a significant franchising model, McDonald's receives royalties and lease payments from its franchisees. Any changes in these payments can influence the overall expense ratio.
3. **Dividend Increase**: McDonald's raised its quarterly cash dividend by 6% in 2024, reflecting continued confidence in its growth strategy and ability to drive long-term profitable growth. While not directly related to the expense ratio, dividend payments are part of the overall cost structure for shareholders.
4. **Expansion and Capital Expenditures**: McDonald's planned for net restaurant unit expansion to contribute nearly 2% to systemwide sales in 2024. Capital expenditures were expected to be between $2.5B and $2.7B, with more than half used for restaurant expansion domestically and internationally. These expansion efforts can temporarily strain financial metrics before they contribute to long-term growth.
5. **Strategic Investments**: The company likely made strategic investments to support its growth initiatives, such as enhancing digital capabilities and loyalty programs. These investments can fluctuate from year to year, affecting the expense ratio.

In summary, McDonald's expense ratio shifts in 2024 were primarily caused by inflationary pressures, royalty and lease payments, dividend increase, expansion and capital expenditures, and strategic investments. These factors, either directly or indirectly, influence the company's cost structure and, consequently, its expense ratio.