McDonald’s vs. Starbucks: why the smaller company makes four times the profit

Starbucks had more revenue than McDonald’s in its last fiscal year — $37.2 billion against $26.9 billion — and less than a quarter of the profit: $1.86 billion against $8.56 billion. The explanation is in the first pages of each 10-K. At the October 5, 2026 close, McDonald’s was worth $164.9 billion and Starbucks $107.7 billion.

A landlord versus a coffee shop

McDonald’s lives mostly on rent and royalties from franchisees, which made up 62% of its revenue; franchisees run 95% of its restaurants and carry most of the costs of running them. Starbucks sells coffee in its own stores, which accounted for 83% of its revenue, so it books every barista’s wage and every cup. That is why Starbucks has more revenue and McDonald’s has a 46% operating margin against Starbucks’ 8%. McDonald’s has told investors it targets a “low-to-mid 50%” operating margin by 2030 — a company target, not a result.

Starbucks: restructuring and a China sale

Starbucks’ fiscal 2025 profit fell 51%. It included $892 million of restructuring and impairment charges, among them 627 store closures in the fourth quarter, and comparable sales fell 1%. In September 2026 it announced the closure of about 1% more of its North American stores, with about $300 million of costs, while still planning about 440 net new stores in fiscal 2026. Starbucks did not buy back any stock in fiscal 2025 or in the first three quarters of fiscal 2026.

It also sold 60% of its China business to Boyu Capital, receiving $3.1 billion and keeping 40% through a joint venture; China left its consolidated accounts on March 30, 2026. That explains the most recent quarter: revenue fell 1.4% while comparable sales rose 7.9%, and profit jumped 87% because it included a $536.3 million pre-tax gain on the sale.

McDonald’s: profit up, stock down

McDonald’s shares closed lower at the end of every month since February 2026, falling 31.7% from a February 27 high of $341.06 to $233.04 on October 5 — down 22.6% over twelve months. The worst day was September 23 (−4.8%), when the company presented new targets in an 8-K filed before the market opened. Over the same period its earnings rose: second-quarter 2026 earnings per share were $3.32, up 6%, with comparable sales up 1.3%. The filings do not explain the slide, and the price-to-earnings ratio fell to 18.8.

Dividends

McDonald’s 10-K says it has paid dividends for 50 consecutive years and raised them every year; our count of annual totals shows 49 straight increases through 2025, which is the same thing — fifty years of payments, an increase every year after the first. Starbucks has raised its annual total 15 years in a row (2011–2025); its November 2025 raise was small, from $0.61 to $0.62 a quarter. Over the ten years to 2025, McDonald’s spent $39.6 billion on buybacks and Starbucks $29.4 billion.

$1,000 over 5, 10 and 20 years

Over five years Starbucks lost money even with dividends reinvested, and both trailed the S&P 500 over five and ten years. Over twenty, McDonald’s beat the index. Measured month by month, McDonald’s was ahead of Starbucks in all 60 months of the five-year window, 110 of 120 months over ten years (last change of lead in September 2021) and 233 of 240 months over twenty (last change in November 2015).

Funds and insiders

Ten of the 38 managers this site tracks held McDonald’s at the end of June 2026; the largest position was Andreas Halvorsen’s Viking ($765 million, after a 22% cut). The Gates Foundation Trust held 334,900 shares, unchanged. Six held Starbucks; Ken Griffin added 78%. Starbucks has had famous holders come and go: Bill Ackman held it from late 2018 to late 2020, peaking at $1.08 billion, and Stephen Mandel from 2024 to 2025. Those values are at June 30 prices; by October 5 the shares were 13.8% (McDonald’s) and 7.6% (Starbucks) lower.

Insiders at McDonald’s did not buy in the twelve months to October 5, 2026; they sold $37.5 million under 10b5-1 plans (including $17.5 million by chief executive Chris Kempczinski) and $3.0 million without one. At Starbucks, director Jørgen Vig Knudstorp bought $0.99 million of stock at $85 in November 2025 — the only open-market purchase — and insiders sold $2.0 million, all under plans.

Daily data is on the McDonald’s and Starbucks pages. Not investment advice.