McDonald’s is Investment Grade. BBB+ (S&P) / Baa1 (Moody’s), both with Stable outlooks confirmed through mid-2025.
McDonald’s is the benchmark QSR NNN investment. The BBB+ / Baa1 ratings are backed by $25.9B in annual corporate revenue, a 95% franchise model that generates fee income regardless of individual unit performance, and one of the most sophisticated real estate programs in American business. Ground leases command 4.38% average cap rates as of Q2 2025 — trading near Treasury yield levels, confirming the market treats this asset class as bond-equivalent. Ideal for 1031 exchangers seeking maximum credit quality, family offices building passive income portfolios, and conservative wealth preservation investors. The primary constraint is supply: fewer than 20 active listings exist nationally at any given time.
Quick Stats — McDonald’s NNN
| Metric | Figure | Source |
|---|---|---|
| S&P Credit Rating | BBB+ / Stable | S&P Global, affirmed Apr 25, 2025 |
| Moody’s Rating | Baa1 / Stable | Moody’s, affirmed Jul 22, 2025 |
| Investment Grade Status | INVESTMENT GRADE | InvestmentGrade.com classification |
| Average Cap Rate | 4.38% | Boulder Group Q2 2025 Net Lease Report |
| Typical Lease Term | 20 years + four 5-year options | Lease comps / broker consensus |
| Rent Escalations | 10% every 5 years (most ground leases) | Lease comps / broker consensus |
| Lease Structure | Absolute NNN Ground Lease (dominant) | McDonald’s IR / broker market |
| U.S. Locations | 13,800+ (40,275 global) | McDonald’s 10-K / IR, FY2024 |
| Corporate Revenue | $25.9 billion (FY2024) | McDonald’s SEC 10-K, FY2024 |
| Avg Unit Volume | $2.7M annually (U.S. system) | McDonald’s IR / NNN Trends, 2025 |
Data verified March 2026. Cap rate sourced from Boulder Group Q2 2025 Net Lease Market Report. Credit ratings from Cbonds / rating agency releases. Updated quarterly.
Corporate Snapshot
McDonald’s is the world’s largest quick service restaurant company, founded in 1955 and operating 40,275 systemwide locations across more than 100 countries. Ray Kroc acquired franchising rights from brothers Richard and Maurice McDonald in 1954, opened the first franchised location in Des Plaines, Illinois in 1955, and took the company public on the NYSE (ticker: MCD) in 1965. Today the company generates approximately $25.9 billion in annual corporate revenue, with systemwide sales exceeding $125 billion across the global franchise network. Approximately 95% of McDonald’s global locations are franchised, generating a recurring stream of franchise fees and rent income that is structurally insulated from individual unit-level performance.
McDonald’s “Accelerating the Arches 2.0” strategy targets approximately 50,000 global locations by 2027, with expansion weighted toward international emerging markets in Asia, the Middle East, and Latin America. The company’s digital loyalty program now has 150 million active users generating over $20 billion in annual digital sales — a figure that strengthens unit economics and rent coverage ratios across the franchise network. The CosMc’s coffee-and-beverage spinoff is expanding to 150+ U.S. locations by end of 2026, using a smaller drive-thru-only prototype that represents the most significant domestic format innovation in the brand’s history.
Credit Rating & Investment Grade Analysis
McDonald’s holds a BBB+ rating with Stable outlook from S&P Global Ratings, affirmed April 25, 2025, and a Baa1 rating with Stable outlook from Moody’s, affirmed July 22, 2025. Both ratings sit solidly within investment grade territory — three notches above the BBB- threshold where investment grade designation begins — and reflect the resilience of McDonald’s asset-light franchise model, which generates predictable fee and rent income regardless of commodity prices or labor market conditions. Net debt to EBITDA runs at approximately 3.8x, deliberately elevated because the company uses balance sheet leverage to fund buybacks and dividends rather than restaurant-level capex (borne by franchisees). Interest coverage remains comfortably above 8x. Both agencies have maintained stable outlooks continuously, with no negative watch actions in the past 24 months.
The single most important due diligence point for any McDonald’s NNN acquisition is identifying the lease guarantor. McDonald’s properties come in two structurally different formats. In the corporate guarantee structure — the dominant format for income property investors — McDonald’s Corporation is the direct lease counterparty on the ground lease and subleases the building to the franchisee; the landlord receives rent from McDonald’s Corp regardless of franchisee performance. In the franchisee-only structure, the individual franchisee entity is the lease counterparty and McDonald’s Corporation has no direct obligation to the landlord. A corporate-guaranteed McDonald’s ground lease and a franchisee-only McDonald’s lease are not comparable investments. Buyers must independently verify the guarantor by requesting the complete lease and any sublease agreement before executing a purchase contract.
Net Lease Structure & Economics
McDonald’s is, in practical terms, a real estate company that sells hamburgers. The corporation owns or controls the land and buildings for approximately 55% of its global restaurant locations, subleasing them to franchisees under long-term agreements that generate contractual rent income. This ownership model is the foundation of the institutional-grade NNN investment profile and the reason McDonald’s ground leases trade more like long-duration corporate bonds than traditional retail property.
Investors encounter three primary structures. The absolute NNN ground lease is the most sought-after: the investor owns the land only, McDonald’s Corporation leases the pad and owns the building, and the investor bears zero landlord responsibilities — no roof, structure, HVAC, or capital expenditure. Base terms run 20 years with four 5-year renewal options (up to 40 years total), and rent escalations are 10% every 5 years on most ground leases. Fee-simple NNN deals, where the investor owns land and building, carry the same corporate guarantee structure but assign certain structural maintenance obligations to the landlord; these appear on older prototype resale transactions. Sale-leaseback structures, where McDonald’s sells a company-operated restaurant and leases it back, typically carry 15 to 20-year terms with 1.5 to 2.0% fixed annual escalations. All three formats, when properly structured with McDonald’s Corporation as guarantor, carry the full BBB+ credit backing of the global system.
Cap Rate & Pricing Trends
The Boulder Group’s Q2 2025 Net Lease Market Report confirmed McDonald’s at 4.38% average cap rate — the tightest pricing in the QSR sector and among the tightest of any single-tenant retail category nationally. At the time of publication, the 10-year Treasury yield was trading at approximately 4.30 to 4.50%, placing McDonald’s ground leases at or near zero risk premium over the risk-free rate. This is not irrational: unlike a Treasury, a McDonald’s ground lease provides scheduled rent escalations (10% every 5 years), real property ownership with inflation-linked appreciation, and a tangible asset that can be refinanced, 1031 exchanged, or sold at a premium. The market is pricing the McDonald’s covenant as bond-equivalent with the additional benefit of real asset ownership.
Supply scarcity is a structural feature of the market. McDonald’s Corporation actively manages its real estate dispositions and does not flood inventory channels. When McDonald’s ground leases do reach the market, they typically go under contract within 30 to 60 days, often at or through the asking cap rate. For 1031 exchange buyers operating under a 45-day identification window, sourcing McDonald’s requires advance broker relationships and off-market access — not standard listing platform searches. InvestmentGrade.com maintains relationships with NNN disposition brokers at Marcus & Millichap, CBRE, and boutique QSR specialists who provide early notification of McDonald’s offerings before public listing.
We provide full buyer representation at no cost — paid by the listing broker’s cooperating commission. Given the extreme scarcity of McDonald’s inventory, our off-market broker network is often the only reliable path within a 1031 exchange timeline.
Real Estate Prototype & Site Selection
McDonald’s site selection is among the most data-intensive in the QSR industry, refined over seven decades of unit-level performance analytics across 40,000+ global locations. The corporate real estate team applies proprietary trade area modeling, traffic pattern analysis, and competitive overlap screens to every potential site. Contemporary builds (2019 and later) standardize dual drive-thru lanes and integrated digital menu boards; legacy 1980s and 1990s prototype buildings with single drive-thrus trade at wider cap rates than current-generation assets.
| Spec | Standard Range |
|---|---|
| Building SF | 3,000 – 4,500 SF |
| Lot Size | 0.75 – 1.25 acres |
| Daily Traffic | 25,000 – 60,000 VPD on primary street |
| Population (3-mile) | 50,000+ residents preferred |
| Drive-Thru | Dual lanes standard on 2019+ builds |
| Preferred Position | Hard corner, outparcel, freeway interchange visibility |
Expansion Pipeline & Strategic Direction
McDonald’s Accelerating the Arches 2.0 targets approximately 50,000 global systemwide locations by 2027, representing net growth of roughly 9,700 units from the current 40,275 count. U.S. expansion focuses on drive-thru modernization, digital integration, and format evolution rather than raw unit count — the domestic market is approaching saturation in most primary and secondary MSAs. Approximately 900 combined new openings are planned annually for 2025 and 2026, with international development weighted toward Asia, the Middle East, and Latin America.
The CosMc’s coffee-and-beverage spinoff is the most significant domestic format innovation in brand history. Targeting 150+ U.S. locations by end of 2026 across Texas, Illinois, and Florida, CosMc’s uses a smaller 2,500 SF drive-thru-only prototype competing directly with Starbucks and Dutch Bros in the premium beverage occasion. For NNN investors, CosMc’s leases carry McDonald’s Corporation guarantees and are expected to price at 4.25 to 4.75% cap rates — slightly wider than traditional ground leases given the shorter operating history. The digital loyalty platform, with $20B+ in 2024 digital sales across 150 million active users, materially strengthens unit economics that underpin franchise rent coverage ratios across the entire system.
Investment Pros & Cons
Backed by $25.9B annual revenue and 40,275 global locations. Both ratings affirmed with Stable outlook in 2025. The strongest credit in the QSR NNN sector.
Absolute NNN ground lease structure eliminates all capex obligations. McDonald’s Corp bears building, roof, HVAC, and maintenance — genuine mailbox money with no management burden.
20-year base terms with 10% rent bumps every 5 years. Four renewal options extend to 40 years total — ideal for 1031 exchange buyers requiring long-term passive income certainty.
4.38% cap rate sits at or below 10-year Treasury yields (~4.30-4.50%). Buyers are accepting minimal spread over risk-free rate — creating meaningful interest rate sensitivity on 20-year duration assets.
Fewer than 20 active listings nationally at any time. 1031 exchange buyers with 45-day identification windows face significant sourcing risk without advance broker relationships and off-market access.
Corporate vs. franchisee guarantee distinction is frequently misrepresented in listing materials. A franchisee-only McDonald’s is a fundamentally different credit than a McDonald’s Corp-backed ground lease. Verify before going under contract.
Comparable QSR NNN Benchmarks — Q2 2025
McDonald’s trades at the tightest cap rate in the QSR sector — reflecting the combination of BBB+ corporate credit, ground lease structure, and supply scarcity premium.
| Tenant | S&P | Avg Cap Rate | IG Status |
|---|---|---|---|
| McDonald’s THIS TENANT | BBB+ | 4.38% | ✓ Yes |
| Chick-fil-A | NR (Private) | 4.45% | N/A |
| Raising Cane’s | NR (Private) | 4.53% | N/A |
| Chipotle | BBB | 4.80% | ✓ Yes |
| Starbucks | BBB+ | 6.40% | ✓ Yes |
| Taco Bell (YUM) | BB+ | 5.52% | ✗ No |
| Wendy’s | B+ | 5.23% | ✗ No |
Cap rates: Boulder Group Q2 2025. Credit ratings: S&P Global as of 2025. Starbucks updated cap rate reflects Q2 2025 market data.
FAQ — McDonald’s NNN Investment
What is the current McDonald’s NNN cap rate?
The average McDonald’s NNN cap rate is 4.38% per the Boulder Group Q2 2025 Net Lease Market Report — the tightest pricing in the QSR sector. Corporate-guaranteed ground leases in primary MSAs may trade at or below 4.10%, while older fee-simple assets in secondary markets can price at 4.60 to 4.90%.
Is McDonald’s investment grade?
Yes. McDonald’s holds BBB+ (S&P, Stable, affirmed April 2025) and Baa1 (Moody’s, Stable, affirmed July 2025) — both solidly within investment grade territory, three notches above the BBB- threshold. McDonald’s is among the highest-rated QSR tenants in the NNN market.
What is the typical sale price for a McDonald’s NNN property?
McDonald’s NNN properties typically sell in the $2.5M to $6M range, with new-construction corporate ground leases in primary markets commanding $4M to $6M+. Older fee-simple and franchisee-guaranteed assets in secondary markets may trade below $3M.
How long are McDonald’s NNN leases and what are the rent escalations?
McDonald’s base lease terms run 20 years with four 5-year renewal options, extending to 40 years total. Rent escalations are typically 10% every 5 years on ground leases; some newer deals use annual CPI-linked escalations of 1.5 to 2.0%.
Who are the typical buyers of McDonald’s NNN properties?
Primary buyers are 1031 exchange investors seeking maximum QSR credit quality, family offices building multigenerational passive income portfolios, and conservative private investors treating BBB+ ground leases as bond-equivalent holdings within a real asset allocation.
What is the difference between a ground lease and fee-simple McDonald’s NNN?
A ground lease means the investor owns the land only — McDonald’s owns and maintains the building. A fee-simple NNN means the investor owns both land and building. Ground leases are preferred: absolute NNN structure with zero landlord responsibilities and consistently tighter cap rates than fee-simple assets.
Can I use a 1031 exchange to purchase a McDonald’s NNN property?
Yes — McDonald’s is among the most 1031-appropriate NNN assets available. Long base terms (20 years), BBB+ corporate guarantee, and absolute NNN structure make it an ideal replacement property. However, supply scarcity requires advance sourcing. Contact InvestmentGrade.com before your 45-day identification window opens.
Full buyer representation at no cost — paid by listing broker’s cooperating commission. Off-market McDonald’s access through our national broker network.
InvestmentGrade Capital arranges NNN acquisition and bridge loans. Current market rates at investmentgrade.com/rates.
Our Capital Markets desk works with family offices and private investors actively acquiring QSR NNN assets. Discreet off-market valuations available.
