McDonald’s Commitment to Digital Ordering Could Make Wait Time Zero a Reality

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McDonald’s Commitment to Digital Ordering Could Make Wait Time Zero a Reality

05/08/2017
When McDonald’s outlined bold plans for revamping their restaurants at its recent Investor Day, what they unveiled felt more like The Jetsons’ “fly-in” Spaceburger restaurant than the McDonald’s of today.
 
Putting an ambitious foot forward in its commitment to digital ordering, which is experiencing double-digit percentage growth even in a flat market, McDonald’s teased out digital innovations including mobile ordering, self-serve kiosks, table-side handoff, and delivery initiatives in the works. Its next-generation “Experience of the Future” restaurant has been performing well across parts of Europe, Canada, and Australia and now comes homebound.
 
If deployed with maximum efficiency, McDonald’s could achieve what Noah Glass, Olo Founder & CEO, called “Wait Time Zero” in 2014: the ability to service customers precisely as they arrive at the store, independent of how long the order took to prepare. In this article, Olo discusses how that could benefit customers as well as the QSR chain.
 
The promise of even faster fast food is possible through digital ordering, by allowing the customer to order and pay ahead of time and schedule a desired pickup time. That means a restaurant’s kitchen can prepare the order just-in-time and have it bagged for the customer’s arrival. Digital ordering time-shifts the order prep to the time before the customer arrives, enabling pickup on demand, even for complex orders with modifications.

Reducing customer wait time pays. Kellogg School of Management estimated that “for a large chain like McDonald’s, [decreased wait time] would result in an increase[d market share] by more than 3 percent.”

Even guests who don’t plan to use digital ordering will enjoy the benefits of faster speed of service, shorter lines and reduced time spent on low value interactions like manually keying in orders and exchanging payment. McDonald’s is set to enable a new wave of hospitality through digital, eventually asking customers to choose table service, counter, drive-thru or curbside pickup when they order.
 
So how will the “Experience of the Future” impact the company’s bottom line? McDonald's CEO Steve Easterbrook predicted that if 20 percent of drive-thru customers were to utilize curbside and another 20 percent use the drive-thru for pickup only, they could serve another 20 cars per hour.
 
Let’s say conservatively that a McDonald’s location achieves that increased volume ten hours per day of the 24 hours they are typically open. Using an estimated average ticket size of $8.75 from a recent Time.com estimate — that equates to an extra $12,250 per week per location. If 60 percent of their top 14,000 U.S. locations increase their throughput, digital ordering could bring McDonald’s over $5.4 billion per year* — before even adding in average transaction gains from digital guests who spend more per order.

Introducing digital technology that gets to know guests over time and calls for them to “create your perfect sundae” or build their burger down to the type of bun gives McDonald’s the potential to enable better customizations for guests without losing the critical ingredient: speed.
 
Nearly seventy years after the original McDonald’s Speedee System of 1948, a new fast food era awaits, made possible by technology and the 80 percent of Americans walking around with POS terminals in their pockets.  
 
*Estimated additional earnings per store per year = $12,250 x 52 = $637,000
Assumes 14,000 stores x .60 = 8400 peak stores
$637k x 8400 stores = $5,350,800,000