McDonald's Delivery Move Won't Bring New Customers But Could Bring Profit

Articles
June 01, 2017

McDonald's Delivery Move Won't Bring New Customers But Could Bring Profit

McDonald’s has leaped ahead of its competition to try to become the fast food delivery king.

Steve Easterbrook, CEO of McDonald’s, announced Wednesday at the Bernstein Strategic Decisions Conference in New York that via its partnership with UberEats, over 2,000 of the chain’s locations currently offer delivery, and the count will grow to over 3,500 locations by the end of June.

Food delivery seems to be all the rage. Amazon, Peapod and Fresh Direct continue to grow while startups like Instacart and Shipt expand their reach by adding more cities and continue to fill their coffers with VC funding. Alibaba made headlines earlier this week by announcing it is taking a $1 billion stake in Chinese food delivery startup Ele.me. So it’s no surprise that McDonald’s, which has been searching for ways to become relevant to a new generation of consumers, and has proven success in delivery in the Middle East and Asia, has leaped ahead of its competition to try to become the fast food delivery king (Sorry, BK!).

On the flight back from Chicago last week, after the National Restaurant Show, coincidentally I watched The Founder – the underrated movie starring Michel Keaton as Ray Kroc, the man who made McDonald’s a global phenomenon. What’s notable is how the systems that the two McDonald brothers created to produce their food and beverages faster than any other restaurant could even imagine, and paved the way for an entire industry, today is a turn off to many consumers who prefer their burgers made to order, more sustainable and with more exotic toppings than just a squirt of mustard, ketchup and two pickles. (I have to admit that I worked at a McDonald’s in New Jersey in high school and made my fair share of the nearly identical burgers that our nation clamored for back then.)

McDonald’s delivery will set you back $4.99, so it’s unlikely that those who order a meal for themselves (breakfast, lunch and dinner items are available) will be the core audience. The delivery service is perfect for offices and groups. Easterbrook also told the conference that 60 percent of deliveries so far have been placed in the evening and late at night.

McDonald’s signature dish is their French Fries. Hot and crispy right out of the fryer. Will UberEats’ hot boxes keep those fries the way we love them? Many people have experienced the convenience of take out from a restaurant or food being delivered by companies like Yelp Eat24, Postmates or DoorDash and followed by the disappointment of unwrapping the food to find the bun on the sandwich jostled and the sauce dripping down the side. For a company like McDonald’s that prides itself on excellent execution, handing off their foods to the independent contractors at UberEats may become a brand nightmare if consumers complain.

Deliveroo UK solved that problem by giving their drivers in cars and on bicycles detailed instructions on how to pack the foods, and by creating a corrugated paper box that has air vents to prevent the food from overcooking and while keeping it warm. It’s an innovation that would have made the McDonald’s brothers proud.

The big opportunity for McDonald’s is finally getting consumers to try their Signature Crafted beef and chicken sandwich meals. These are the sandwiches designed to compete with the burgers from Five Guys, Shake Shack and others who have upped the quality, demand…and price for a burger. On the UberEats app in Southern California, McDonald’s still leads with the Big Mac, Quarter Pounder and other favorites. It is a safe move focused on their present customers, but does little to promote their new top of the line offerings to a new customer base.