FREQUENT FRYERS
McD’s eyeing first-ever loyalty program
McDonald’s, which recently ran out of ingredients for its megapopular Travis Scott Meal promotion, is quietly gearing up to test a food-loyalty program to boost pandemic sales.
At least that’s the word on Wall Street, thanks to a little-noticed research report detailing a powwow that brokerage firm Morgan Stanley recently had with several top McDonald’s executives, including CFO Kevin Ozan and the president of McDonald’s US operations, Joe Erlinger.
Among the takeaways from the virtual meeting was that the burger slinger “expects to (finally) launch a loyalty program and is working on plans to test one, which could be a key mobile unlock,” according to the Sept. 18 note.
McDonald’s has offered a perks program for its McCafe line of coffee-based drinks, which lets customers get a free coffee after making five purchases via the app. But the chain behind the Big Mac has never doled out rewards to loyal consumers of its burgers and fries — despite widespread adoption by the rest of the industry.
Morgan Stanley predicted that the new loyalty program will help drive more people to order their meals via McDonald’s app, which would then help to “relieve some drive-thru capacity.”
Both online ordering and drive-thru service have become popular during the pandemic as ways to avoid coming in contact with the coronavirus.
McDonald’s drive-thru business rose to encompass nearly 100 percent of sales during the height of the pandemic, up from 70 percent, Morgan Stanley said.
The Morgan Stanley analysts behind the report didn’t return a request for more information, and McDonald’s declined to comment. But experts see the superchain offering small perks like $1 off purchases or buy-one-get-onefree deals for Egg McMuffins, Quarter Pounders and even the Big Mac.
“McDonald’s knows exactly what ‘works,’ where the brand ‘equity’ is and what they would rather not discount,” said John Gordon, a restaurant consultant with Pacific Management Consulting Group.
Still, Gordon is skeptical that a loyalty program will help McDonald’s with its drive-thru wait times.
The last time McDonald’s told Wall Street it was working on a loyalty program was in 2016, but the plan never materialized amid fears that it would increase backlog at its already slow drive-thrus, Gordon said.
Since the pandemic, however, McDonald’s has shaved about 25 seconds off its average 2019 drive-thru time of five minutes. It did this by simplifying its menu, including eliminating allday-breakfast items to help store operators better manage their drive-thrus.
Fast-food sales have slowed across the board due to the pandemic, but McDonald’s has fared better than most. Last week, it said it was running out of burgers due to sky-high demand for the $6 Travis Scott Meal.