Digital, Delivery Drives Growth at McDonald's

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McDonald's is sharing lessons learned about delivery and its impact on operations from China, its top delivery market.

Digital, Delivery Drives Growth at McDonald's

2018 was a year for transformation for McDonald’s U.S. stores.

About 4,500 restaurants were converted to the fast food giant’s “Experience of the Future” concept that combines state-of-the-art technology including digital menu boards and self-ordering kiosks with an updated look and delivery.  “That meant we reopened more than 10 new restaurants everyday throughout the year,” President and CEO Steve Easterbrook said during a recent earnings call with analysts. “…This is an aggressive pace with an ambitious agenda at a time when the U.S. market is experiencing intense competitive pressures.”

In the U.S., McDonald’s is able to react nimbly thanks in part to streamlining operations. Last year the company reduced the number of co-ops to less than 60 from nearly 200 and also halved the number of field offices. By the end of the year the company plans to have converted more than 12,000 U.S. locations, HT previously reported. 

At the store level, digital innovations are paying off. In Germany, McDonald’s stores are leading the digital charge. “Germany is outperforming competitors as customers enjoy modernized restaurants and the benefits of one of the most effective digital engagement programs in the McDonald's System,” said Easterbrook. The market posted seven consecutive quarters of comparable sales growth and posted its best annual comparable sales growth percentage in 25 years, he added.

Italy, one of McDonald’s “best-performing markets,” is seeing “positive results from investing in Experience of the Future” and initiatives such as digital and delivery, Easterbrook said.

Delivery continues to offer growth potential in the U.S. and abroad. Delivery continues to “grow rapidly” through additional restaurants and partnerships with third-party providers. “Many of our major markets such as to the U.S., France and in the U.K. achieved delivery sales growth in the high double-digits in restaurants offering a service for more than 12 months and other markets such as Canada, Italy and Russia grew even more,” said Easterbrook.

Across the enterprise, McDonald’s is sharing best practices. And for delivery, the role model is China. The company’s “most developed delivery market” is helping newer delivery markets, especially related to restaurant operations. “…Underpinning everything we do … is our commitment to make delivery easy and convenient for our customers, which will help us maximize the competitive advantage of our business,” said Easterbrook.

“This is the right strategy for our business and we're committed to driving shared success… We established a solid foundation in the U.S. last year that will serve us well in 2019.