McDonald’s U.S. franchisees will soon begin contributing to a digital marketing fund as part of the company’s efforts to expand its digital business. This move is aimed at modernizing the fast-food giant’s marketing strategy and gaining a competitive edge in the industry.
According to a memo written by McDonald’s U.S. Customer Experience Officer Tariq Hassan and Chief Information Officer Whitney McGinnis, the company plans to invest hundreds of millions of dollars over the next few years to improve its loyalty program and add new ordering channels. These initiatives are expected to boost McDonald’s digital business and enhance its customer experience.
During the first quarter, loyalty program members contributed more than $6 billion in system-wide sales globally. In the U.S. alone, McDonald’s has 34 million active digital customers, slightly behind Chipotle Mexican Grill’s 40 million loyalty members and Starbucks’ 32.8 million.
To achieve its goal of reaching 100 million loyalty program members by 2027, McDonald’s will require franchisees to contribute to the digital marketing fund. The franchisor recommends that franchisees use their existing marketing contribution, which currently requires them to spend at least 4% of gross sales. This approach is expected to result in a reduction in traditional marketing tools such as TV commercials, with a greater focus on strategies that directly impact sales.
Starting next year, U.S. operators will be required to contribute 1.2% of projected identified digital sales to the fund. This includes transactions made through the loyalty program or for delivery. The contribution rate will be adjusted annually based on projections made at the beginning of each year.
As a result of this change, McDonald’s anticipates that every U.S. restaurant will see an increase in cash flow of approximately $2,600 starting in 2025. This increase will be attributed to the shift of digital investment costs from the franchisee’s profit and loss statement to the marketing contribution.
Franchisees in the U.K., Canada, Australia, and Germany will also be required to contribute to the global digital marketing fund. Other markets within McDonald’s will adopt this approach at a later date.
Overall, this move by McDonald’s signifies its commitment to digital transformation and recognizes the importance of leveraging technology and data in driving business growth. By investing in its loyalty program and expanding its digital presence, McDonald’s aims to enhance customer engagement and ultimately increase sales.
