Key Takeaways
- Energy and commodity expenses are climbing for McDonald’s (MCD) and Restaurant Brands International (QSR) due to the Iran conflict
- Rising fuel prices are reducing discretionary food spending among lower-income customers
- Asian supply chain disruptions continue with increasing logistics expenses for both restaurant operators
- Bernstein maintains Market Perform rating on MCD with $340 price target, suggesting approximately 10% potential gain
- Both companies report no anti-American backlash connected to the current conflict
The Iran conflict is beginning to impact financial results and forward guidance for major global quick-service restaurant operators.
Bernstein analysts met with executives from McDonald’s and Restaurant Brands International (QSR) recently, emerging with consistent feedback: the conflict generates pressure across both demand and supply aspects of restaurant operations.
While neither organization faces immediate crisis conditions, operating environments are tightening. The latter half of 2026 may present additional challenges should energy costs remain elevated.
McDonald’s maintains hedging strategies designed to reduce immediate exposure to energy and commodity price fluctuations. These protections help company-operated locations and franchise partners manage current price increases.
These hedges carry time limitations. When prices remain elevated over extended periods, contracts renew at prevailing market rates — transferring costs directly to franchise operator margins.
Franchise profitability carries significance because these operators finance location remodeling and technology implementations. Sustained margin compression could delay capital investment programs.
Lower-Income Shoppers Reducing Visits
Gasoline price increases create measurable consumer behavior shifts. Lower-income households allocate larger portions of earnings toward transportation fuel, meaning price spikes function as effective reductions in restaurant spending capacity.
This consumer segment represents the foundation of quick-service restaurant traffic. Both MCD and QSR have emphasized value-oriented promotions to maintain this customer base, though evidence suggests weakening, especially in international territories.
Transaction data from early March indicates slowing consumer expenditure patterns. U.S. weather disruptions further complicate first-quarter performance interpretation, obscuring fundamental trend analysis.
Bernstein noted that restaurant chains with concentrated presence in the Northeast U.S. and Canada may experience compounded difficulties from consecutive adverse events in those markets.
Asian Logistics Face Complications
Supply chain challenges appear most pronounced in Asia. Both organizations reported inconsistent supply availability and escalating transportation costs throughout the region.
For RBI — which operates Burger King, Popeyes, and Tim Hortons — the priority involves maintaining value proposition consistency while local franchisees manage increasing operational expenses.
McDonald’s operates approximately 5% of its global locations in Middle Eastern markets. This region experienced genuine obstacles from anti-Western sentiment during 2023 and 2024. Currently, neither organization reports similar patterns emerging from the Iran situation.
This represents a notable distinction from previous geopolitical tensions and eliminates one potential risk factor from current assessments.
Bernstein preserved its Market Perform rating alongside the $340 price target for MCD. Trading at $308.93, shares could reach the target representing roughly 10% appreciation, although InvestingPro analysis indicates the stock trades above its Fair Value calculation.
McDonald’s holds a 50-year record of annual dividend increases. Current dividend yield stands at 2.41%.
The organization plans to introduce new value promotions in April, featuring menu items at $3 and below, accompanied by $4 breakfast combination meals.
