McDonald's Corporation vs Subway: Strategic Comparison

This in-depth comparison examines McDonald's Corporation and Subway across revenue, market value, business model, competitive positioning, and long-term growth strategy. Whether you are researching McDonald's Corporation on its own, evaluating Subway, or weighing the two companies side by side, the breakdown below highlights where each company leads and where the gap between McDonald's Corporation and Subway is widest.

On the headline numbers, annual revenue is $26.9B (FY2025) for McDonald's Corporation and $925.0M (FY2025) for Subway, while their respective market capitalizations stand at $175.7B and N/A. Both McDonald's Corporation and Subway are headquartered in United States. Their local markets and applicable rules may still differ.

McDonald's Corporation: McDonald's is the largest restaurant brand in the world by systemwide sales, serving customers in more than 100 countries from its Chicago headquarters. Its focus is consistency and speed at scale: the same core menu, standardized operations, and a franchise system that lets local owners run restaurants while the corporation controls the brand, supply standards, technology, and often the real estate. The company is headquartered in Chicago, Illinois. The absolute most dominant restaurant empire in human history was founded in 1940, completely revolutionizing global diets through the relentless, assembly-line perfection of the Speedee Service System.

Subway: Subway is the largest sandwich chain in the U.S. by unit count and one of the largest restaurant brands in the world. It is entirely franchised, owned by Roark Capital since April 2024, and run from Miami. The U.S. system peaked above 27,000 units in the mid-2010s and has closed nearly 8,000 locations over the past decade, ending 2025 with 18,773. Corporate profit has nonetheless climbed, reaching $689 million in 2025. The company is headquartered in Shelton, Connecticut.

McDonald's Corporation and Subway pursue distinct approaches to generating revenue, and understanding how each company operates is the foundation of any fair comparison between McDonald's Corporation and Subway.

McDonald's Corporation business model: About 95% of McDonald's restaurants are owned and operated by franchisees or developmental licensees. The corporation makes money in three main ways: (1) rent, because it owns or leases the land and buildings at many franchised sites and charges franchisees rent, often tied to a percentage of sales; (2) royalties, a percentage of each restaurant's monthly sales; and (3) initial fees plus sales at the small share of company-operated restaurants. Franchised revenue carries far higher margins than company-store food sales, which is why $26.9 billion of 2025 revenue produced $8.6 billion of net income.

Subway business model: Subway owns no restaurants. Franchisees pay an upfront franchise fee plus a royalty of 8% or 10% of sales depending on their agreement, along with an advertising fund contribution. Subway also collects vendor rebates through its supply chain, which reached $136.5 million in 2025, or 14.8% of revenue, up from $44.7 million (5.4%) in 2021. The old development agent system, in which regional agents sold and monitored stores for a cut of royalties, was largely brought in-house under John Chidsey. Because stores need no fryers or hoods, they fit into small sites such as gas stations, airports and campuses.

The durability of a company's moat often decides long-term winners. Here is how the competitive advantages of McDonald's Corporation stack up against those of Subway.

McDonald's Corporation competitive advantage: McDonald's advantage is scale that rivals cannot easily copy: more than 45,000 restaurants, control of prime real estate at many franchised sites, a long-tenured franchisee base that funds most store capital, and a supply chain that buys beef, potatoes, chicken, and packaging at volumes few chains match. That scale supports national value offers and heavy marketing while keeping corporate margins high, and its loyalty program now gives it first-party data on hundreds of millions of customers.

Subway competitive advantage: Subway's main advantage is reach and low build cost. A store needs no fryers or exhaust hoods, so it can open in spaces too small for a burger chain, and its brand is known in more than 100 countries. That same density is now a weakness in the U.S., where many units sit close together and average about $500,000 in annual sales, well below rivals such as Jersey Mike's.

Future prospects matter as much as current results. The growth strategies below explain how McDonald's Corporation and Subway each plan to expand from here.

McDonald's Corporation growth strategy: McDonald's growth plan, branded Accelerating the Arches, rests on marketing, core menu (burgers, chicken, coffee), and the 3 D's: digital, delivery, and drive-thru. The company targets roughly 50,000 restaurants worldwide by the end of 2027, with China, other developmental licensed markets, and the U.S. contributing the largest number of openings. Loyalty is the main digital lever: by mid-2026 it had nearly 220 million 90-day active users across 70 markets and $40 billion of trailing-twelve-month loyalty systemwide sales. In the U.S., where Q2 2026 comparable sales rose only 0.8% with lower guest counts, Skye Anderson was named President of McDonald's USA in August 2026 to sharpen value execution.

Subway growth strategy: Under CEO Jonathan Fitzpatrick, Subway is focused on franchisee profitability and value. Steps since mid-2025 include a one-time cash rebate to franchisees based on first-half 2025 sales, three new regional presidents, a regional marketing structure that replaced the global CMO role in 2026, a relaunched Sub Club loyalty program, and an April 2026 value menu. Abroad, it relies on large master franchisees, such as the 2023 agreement to open about 4,000 stores in mainland China over 20 years.

A closer look at the financial trajectory of McDonald's Corporation and Subway rounds out the comparison.

McDonald's Corporation: McDonald's reported $26.885 billion in FY2025 consolidated revenue, compared with $139.4 billion in systemwide restaurant sales. The latter includes franchisee sales, which are not booked as corporate revenue. The FY2025 Form 10-K separates $16.548 billion of franchised revenues, $9.690 billion of company-operated restaurant sales, and $647 million of other revenues. This distinction matters when comparing McDonald's with restaurant operators that own most of their stores. The company reported $12.393 billion of operating income (a 46.1% operating margin), $8.563 billion of net income, $10.551 billion of operating cash flow, and $3.365 billion of capital expenditures in FY2025. It returned $7.131 billion through dividends and share repurchases. Those are corporate results, not franchisee profits or an estimate of systemwide restaurant earnings. In Q2 2026, McDonald's reported 4% consolidated revenue growth, 1.3% global comparable-sales growth, $3.32 diluted EPS ($3.38 excluding specified charges), and $37 billion of quarterly systemwide sales. These quarterly figures should not be added to the FY2025 annual table. The operating question is whether restaurant sales and franchisee economics can keep growing while the company funds new locations and shareholder returns.

Subway: Subway is privately owned, and its restaurants are operated by franchisees. Restaurant Business, citing Subway's 2026 franchise disclosure document, reported about $925 million of franchisor revenue and $689 million of franchisor net income for 2025, versus $972 million and $15.4 million in 2023. Restaurant Dive separately reported about $397 million of franchisor net income for 2024. These are not global restaurant sales or an individual franchisee's earnings. The linked news reports describe the filing, but the filed FDD itself was not available for direct verification in this review. Subway's franchise FAQ lists an 8% royalty and a 4.5% advertising contribution on gross sales, subject to its disclosure document. Restaurant Business reports that royalty revenue fell over 2023-2025 while vendor rebates rose, and that the acquired business had about $5.7 billion of debt at year-end 2025. Those franchisor-level figures cannot be used to calculate the sales or profit of a typical restaurant.