McDonald’s counting on delivery for growth
After years of seeing fewer CHICAGO U.S. customers come through its doors, McDonald’s Corp. is increasingly embracing a different philosophy: Take the food to them.
The fast-food chain will rely heavily on delivery to reignite sales, especially in the U.S., according to executives speaking at McDonald’s investor day in Chicago on Wednesday. It is also turning more aggressively to digital technology, such as mobile ordering and payments, to meet its growth targets.
The overhaul is part of a bid to achieve long-term systemwide sales growth of three to five per cent, starting in 2019. McDonald’s also aims to boost operating margins from the high 20 per cent range to around mid-40 per cent.
“Restaurant delivery is a US$100billion market and it’s exploded,” senior vice-president Lucy Brady, who runs strategy for the chain, said at the event. “There’s significant opportunity that we haven’t even tapped into yet.”
The world’s biggest restaurant chain has faced slowing sales since excitement around the 2015 U.S. launch of all-day breakfast has died down. That’s put pressure on chief executive Steve Easterbrook to find new initiatives that can revive momentum. Though the company has been testing delivery for years, it now sees an opportunity to “scale quickly” with the concept.
Many of McDonald’s overseas restaurants already offer delivery, especially in Asia and the Middle East, and the company generated almost US$1 billion in sales from the channel last year.
McDonald’s has been working with Postmates Inc., Uber Technologies Inc.’s UberEats and Foodpanda to test various approaches.