McDonald’s has experienced a significant boost in sales due to its loyalty program, with over $6 billion in system-wide sales contributed by members globally during the first quarter. Despite having 34 million active digital customers in the U.S., the company still falls behind Chipotle Mexican Grill and Starbucks, which have 40 million and 32.8 million loyalty members respectively.
To fund this new initiative, McDonald’s is suggesting that franchisees use their existing marketing contribution of at least 4% of gross sales to support the program. This shift may lead to a reduction in traditional marketing tools like TV commercials, as the company focuses on strategies that have a more direct impact on driving sales.
Starting next year, operators in the U.S. will need to contribute 1.2% of projected identified digital sales towards the fund. The rate will be adjusted annually based on projections made at the beginning of each year, and McDonald’s anticipates an increase in cash flow of around $2,600 for every U.S. restaurant starting in 2025 as the burden of digital investment costs shifts from franchisees to the marketing contribution.
Franchisees in other countries like the UK, Canada, Australia, and Germany will also be required to contribute to the global digital marketing fund. Eventually, all remaining McDonald’s markets will transition to this new approach as well.
