McDonald's Corp's 10-Q for the quarter ended September 30, 2026, filed November 6, 2026, closes out a three-quarter stretch in which operating profit grew faster than sales. Revenue rose modestly from quarter to quarter, but operating income and net income climbed by larger percentages, lifting the operating margin from about 45% in the first quarter to about 50% in the third. The question for an owner is how much of that gain is durable operating leverage and how much reflects items the reported line items do not break out.
The quarterly line items
| Line item (as reported) | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|
| Revenues | $6.517B | $7.099B | $7.157B |
| Operating income | $2.953B | $3.338B | $3.595B |
| Operating margin (derived) | 45.3% | 47.0% | 50.2% |
| Interest expense | $400M | $409M | $408M |
| Income tax expense | $559M | $574M | $702M |
| Net income | $1.983B | $2.362B | $2.486B |
| Net margin (derived) | 30.4% | 33.3% | 34.7% |
Revenue grew about 8.9% from the first quarter to the second, then only about 0.8% from the second quarter to the third. Operating income rose about 13.0% and then about 7.7%. Net income rose about 19.1% in the second quarter and about 5.3% in the third. Across the nine months from the first quarter to the third, revenue increased roughly 9.8%, operating income about 21.7% and net income about 25.4%.
Where the margin gain came from
The reported line items alone do not explain what drove the margin change, and the analysis below stays within them. The clearest tagged cost line is selling, general and administrative expense. It was $759M in the first quarter, rose to $817M in the second and fell back to $759M in the third. In the third quarter, the $58M decline in that line accounts for roughly a fifth of the $257M sequential increase in operating income. Because revenue barely moved that quarter, the remaining four-fifths of the operating income gain sits in costs or other items that are not separated in the reported figures.
The second-quarter pattern points the same way. SG&A rose by $58M, yet operating income still increased by $385M on $582M of additional revenue. That combination suggests the margin expansion in the middle quarter was not simply a function of cutting overhead. The company's cost of sales and occupancy lines, as tagged in these figures, do not by themselves show whether franchise-model economics or cost management accounted for the difference. Readers who want that answer should look to the operating-expense discussion in the 10-Q itself.
Net income against revenue
Net income grew faster than revenue over the period, but the third quarter shows the gap narrowing. Income tax expense rose from $574M in the second quarter to $702M in the third, a jump of about 22%, which absorbed a meaningful share of the operating income gain. Equity-method income was $52M, $46M and $59M across the three quarters, a small contributor. Interest expense was essentially flat at $400M, $409M and $408M, so financing costs did not drive the profit trend. As a share of operating income, interest fell from about 13.5% in the first quarter to about 11.3% in the third, mostly because operating profit grew while the interest line held steady.
What to watch in the next filing
The central question is whether the third-quarter margin of about 50% holds when revenue growth is close to flat. Three points are worth checking in the company's next 10-Q and annual report: whether the cost lines behind the operating income gain are described in the operating-expense discussion, whether the higher third-quarter tax expense reflects a change in the effective rate or in pre-tax income, and whether revenue growth picks up enough to test operating leverage on a larger sales base. The reported figures establish that margins widened during 2026. They do not, on their own, establish how much of that widening will persist.