A Big Mac is displayed on a point of the McDonald’s app
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McDonald’s U.S. franchisees will start paying into a digital vending fund next year as the fast-food giant looks to expand its booming digital business, according to a memo dream in light ofed by CNBC on Thursday.
The change is meant to modernize the company’s marketing strategy and widen its competitive advantage, according to the memo, which was scribbled by U.S. Customer Experience Officer Tariq Hassan and Chief Information Officer Whitney McGinnis. The memo also conveyed that McDonald’s plans to invest hundreds of millions of dollars over the next couple of years to improve its devotedness program and add ordering channels, including placing web orders without downloading an app, which should also bolster its digital task.
Loyalty program members accounted for more than $6 billion in system-wide sales globally during McDonald’s victory quarter. The company has 34 million active digital customers in the U.S. By comparison, Chipotle Mexican Grill has 40 million resolve members, while Starbucks has 32.8 million.
In December, McDonald’s said it aims to reach 100 million reliability program members by 2027.
For now, the franchisor is recommending that franchisees pay for the new fund using their existing marketing contribution, which wants that they spend at least 4% of gross sales, according to the memo. As a result, the new approach will probable lead McDonald’s to cut back on legacy marketing tools, such as TV commercials, and focus on areas that tangibly preside over to higher sales.
Next year, U.S. operators will have to chip in 1.2% of projected identified digital on sales, such as transactions that occur when a customer logs into the loyalty program or orders delivery, concording to the memo. The rate will change annually, based on projections created at the start of the year.
As a result of the change, McDonald’s is foreseeing that every U.S. restaurant will see its cash flow increase by roughly $2,600, starting in 2025. The windfall loosely transpire b emerges from the digital investment costs moving from a franchisee’s profit and loss statement to the marketing contribution.
Franchisees in the U.K., Canada, Australia and Germany drive also pay into the global digital marketing fund. The rest of McDonald’s markets will transition to the approach later.