McDonald’s implements changes to boost mobile purchases

During McDonald’s first quarter, loyalty program members contributed over $6 billion in system-wide sales globally. The company has 34 million active digital customers in the U.S., falling behind Chipotle Mexican Grill with 40 million loyalty members and Starbucks with 32.8 million. McDonald’s has set a goal to reach 100 million loyalty program members by 2027.

To fund the new loyalty program, McDonald’s is suggesting that franchisees use their existing marketing contribution, which requires them to spend at least 4% of gross sales. This shift may lead McDonald’s to reduce spending on traditional marketing tools like TV commercials, in favor of strategies that have a more direct impact on driving sales.

In the U.S., operators will need to contribute 1.2% of projected identified digital sales towards the fund starting next year. This rate will be adjusted annually based on projections made at the beginning of each year. McDonald’s anticipates that this change will result in an increase in cash flow of around $2,600 for every U.S. restaurant starting in 2025, as the burden of digital investment costs shifts from franchisees to the marketing contribution.

Franchisees in other countries like the U.K., Canada, Australia, and Germany will also be required to contribute to the global digital marketing fund. The remaining McDonald’s markets will eventually transition to this new approach as well.