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McDonald’s has big hopes for its loyalty program

The company plans to expand its MyMcDonald’s Rewards program this summer as it works to build frequency.
McDonald's loyalty program
Image courtesy of McDonald's

At some point during the year, 85% of the U.S. population will walk into a McDonald’s at least once.

That’s a substantial population of customers, and one the company hopes can come by even more often if just given the right incentives. So the Chicago-based burger giant appears poised to finally get a national loyalty program off the ground.

The company said it plans to expand its MyMcDonald’s Rewards program in the U.S. later this year. “If loyalty can build frequency, given the base of customers we have in the U.S., that is just a tremendous unlock for us,” Joe Erlinger, president of McDonald’s USA, said on the company’s first-quarter earnings call.

Loyalty programs have been increasingly popular in the restaurant space, but especially in those chains where frequency is a big deal—breakfast concepts, for instance, and pizza chains. More than half of the revenues at Starbucks corporate stores come through that chain’s Starbucks Rewards program. Domino’s sales growth in recent years has been driven at least in part based on that chain’s loyalty program.

McDonald’s more direct rivals have loyalty, too—Wendy’s recently launched its loyalty program, for instance, and Burger King is working on one.

At McDonald’s, a loyalty program could bolster its morning business while maintaining some momentum it picked up last summer. Same-store sales normalized in the third quarter last year as customers flocked to its drive-thrus and promotions like the Travis Scott Meal got customers excited. Same-store sales picked up speed in the first quarter, rising 13.7% on a two-year basis and on a similar trajectory in the second quarter.

Digital sales are a big part of that improvement. When customers ordered the Travis Scott Meal, they often did so on their McDonald’s app—and they stayed there. The company’s U.S. market alone has some 20 million users of that app. Digital sales totaled nearly $1.5 billion at the chain in the first quarter.

Loyalty is the next big thing. The company started testing MyMcDonald’s in Phoenix last year and expanded that test to New England earlier this year.

Erlinger said that user adoption is “up significantly since the test began,” frequency has also increased, and loyalty customers “are far more likely to return in the next 30 days than non-loyalty customers.”

He also said customer satisfaction is up. “Customers love the personalized experience of being greeted by their first name,” Erlinger said. Crew, he added, have had positive marks for how they’ve been trained on the program.

One challenge for the program is the drive-thru, where the vast majority of the chain’s customers get their orders. Erlinger said there is a “modest impact” on the company’s operations at the drive-thru order point, though he said customers are taking less time at the window because they pay with their phones.

But, said CEO Chris Kempczinski, “about the identification at the drive-thru order point, we’re not there yet. But I think it’s safe to say we have a number of ideas on how we’re going to be able to make that happen, and that’s part of our rollout plan over the next couple of years.”

Nevertheless, the company believes this will have a positive sales result around the world. “We wouldn’t be doing this if we didn’t think there was going to be an incremental benefit to loyalty,” he said. “We’re not at the point of quantifying that. But our thesis is that there’s going to be an incremental benefit.”

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