McDonald’s U.S. franchisees are set to contribute to a digital marketing fund from next year onwards, aiming to bolster the fast-food giant’s thriving digital business.
A memo on Thursday, outlines this significant change intended to modernize McDonald’s marketing strategy and enhance its competitive edge.
The memo, jointly authored by U.S. Customer Experience Officer Tariq Hassan and Chief Information Officer Whitney McGinnis, highlights plans for substantial investments over the next few years to revamp the loyalty program and expand ordering channels.
During McDonald’s first quarter, loyalty program members drove over $6 billion in system-wide sales globally.
Notably, the company boasts 34 million active digital customers in the U.S., positioning itself in a strong digital landscape alongside competitors like Chipotle Mexican Grill and Starbucks.
The company’s ambitious goal is to reach 100 million loyalty program members by 2027. Initially, McDonald’s proposes that franchisees utilize their existing marketing contribution, equivalent to at least 4% of gross sales, to fund the new initiative.
Consequently, this shift may prompt a reduction in traditional marketing tools like TV commercials, redirecting focus towards strategies proven to drive sales.
Beginning next year, U.S. operators will allocate 1.2% of projected identified digital sales to the fund, covering transactions linked to loyalty program logins or delivery orders. This contribution rate will be adjusted annually based on projections set at the start of each year.
McDonald’s foresees a positive impact from this change, anticipating an approximate cash flow increase of $2,600 per U.S. restaurant by 2025.
This boost results from the transition of digital investment costs from franchisees’ profit and loss statements to the marketing contribution.
The global digital marketing fund will not be exclusive to U.S. franchisees; those in the U.K., Canada, Australia, and Germany will also contribute.
Other McDonald’s markets will adopt this approach in the future, highlighting the company’s commitment to leveraging digital platforms for sustained growth and innovation.
