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McDonald’s turns on its delivery marketing

The burger giant is more aggressively advertising the service. It will be a big test of its ability to deliver traffic, says RB’s The Bottom Line.
Photograph courtesy of McDonald's Corp.

the bottom line

On Saturday, McDonald’s is offering free medium french fries to customers who place their orders through the Uber Eats delivery app.

The giveaway is being done to promote National French Fry Day. But it’s also a notable moment for the chain—arguably its most extensive delivery promotion since it began rolling out the service with Uber Eats two years ago.

It’s a potentially major test, both for McDonald’s ability to generate traffic through delivery, and for the service itself.

The Chicago-based burger giant has seen its traffic stumble despite same-store sales that have easily bested its competitors. Customers are ordering higher-end burgers and adding some low-cost items to their orders, but they are coming in less often.

Traffic is down 1.3% year to date, according to Transaction Insights data from Restaurant Business sister company Technomic. But sales are up 4.4%.

Delivery represents only a tiny portion of its sales. But it did not start advertising the service nationally until about six weeks ago.

The company has been eager to begin marketing delivery, believing that’s key to generating stronger sales.

“Our biggest opportunity still on delivery in the U.S. and around the world is customer awareness,” CFO Kevin Ozan told investors in May, according to a transcript of the conversation from financial data site Sentieo. “That’s our biggest focus right now, because we do have pretty high repeat order rates.

“So if we can get more people … aware that we offer delivery and offer it through Uber Eats or whatever other provider, we generally find high customer satisfaction rates, high repeat order rates.”

There is some evidence that well-known brands with effective delivery marketing strategies can generate same-store sales growth. Chipotle Mexican Grill saw strong sales in the fourth quarter of last year and the first quarter of this year, in part because of its delivery strategies. And there’s anecdotal evidence it’s working for Taco Bell.

Other brands have not necessarily generated sales growth with their delivery marketing messages, however.

And in any event, none of the brands are of the size of McDonald’s. It is immense, and its low average check requires a large volume of traffic to generate sales. That means its delivery marketing would have to generate a lot more business to impact the brand than any other concept.

If it works, McDonald’s delivery could stress Uber Eats’ ability to get food to consumers.

For the most part, there is considerable uncertainty regarding the potential for delivery to impact the industry’s overall sales.

If that is to happen, then a chain on the scale of McDonald’s is going to have to demonstrate sales and traffic growth by using the service. That makes the chain’s marketing strategy an important test for the future of third-party delivery.

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