McDonald’s New Zealand has reduced its dividend payout to its U.S. parent by more than half, citing a fall in net profit and higher tax obligations. The 2023 dividend dropped to $80 million, compared to $180 million the previous year.
Net Profit Declines Despite Slight Growth in Pre-Tax Earnings
McDonald’s NZ reported a net profit after tax of $59.8 million—down 43.2% year-on-year. There’s still a sharp decline despite the marginal increase in pre-tax profit, which rose less than 1% to $147.2 million.
A big factor on why the drop was doubling in income tax expenses, reaching $87.4 million. The said figure includes a substantial $43 million in deferred income tax, significantly impacting the bottom line.
Revenue Steady While Operating Costs Persist
Overall revenue fell slightly to $329 million while customer revenue nudged upward to $203.4 million, while rental income remained flat. Meanwhile, the company maintained trademark payments to McDonald’s Asia Pacific, totalling $36.1 million for the year. Employee expenses were flat at $51 million.
The financial documents released through the Companies Office reveal a business maintaining stable top-line performance while wrestling with growing operational and fiscal burdens.
Holiday Pay Remediation Adds Administrative and Financial Strain
In addition to its rising tax bill, McDonald’s NZ has also been undertaking employee remediation efforts related to miscalculated annual leave entitlements. The company began this work in August 2023, covering errors dating back as far as 2009.
McDonald’s NZ joins a growing list of employers and government agencies needing to correct entitlements under the Holidays Act 2003, adding another layer of financial and administrative complexity.
Market Share Remains Strong Despite Financial Headwinds
McDonald’s NZ remains a dominant force in the country’s fast-food sector. A February 2025 IbisWorld report estimated McDonald’s holds a commanding 25.6% share of New Zealand’s $4.2 billion fast-food market, with annual domestic revenue estimated at $1.1 billion.
Its market share has grown 6.1 percentage points over the last five years, putting it well ahead of competitors such as NZX-listed Restaurant Brands, which operates KFC and holds a 15.3% market share.
Global Performance Challenges Add to Local Pressures
The dividend cut and profit drop occur against a backdrop of declining global performance for McDonald’s Corporation. The parent company, listed on the New York Stock Exchange, saw foot traffic fall across global stores in Q1 of the year, with U.S. same-store sales dipping 3.6%.
While McDonald’s NZ has managed to grow its share of the local market, these global trends may influence future strategy, performance, and scrutiny at the local level.
McDonald’s New Zealand is adjusting to a tougher operating environment, shaped by regulatory pressure and internal remediation efforts. The company’s dividend cut suggests an effort to shore up stability.