Starting in 2025, McDonald's will begin requiring U.S. franchisees to contribute to a new digital marketing fund to strengthen its digital business. CNBC reported.
The strategic move, detailed in a memo from McDonald's U.S. customer experience officer Tariq Hassan and chief information officer Whitney McGinnis, aims to modernize the company's marketing efforts and expand its competitive edge. The purpose is
The company plans to invest significantly to upgrade its loyalty program and introduce additional ordering channels, including web-based ordering that doesn't require an app.
This investment is part of McDonald's strategy to modernize marketing and maintain competitive advantage.
Loyalty program members contributed more than $6 billion in global sales in the first quarter of 2024, and with 34 million active digital customers in the U.S., McDonald's aims to grow its digital customer base. Masu.
The company aims to increase the number of loyalty program members to 100 million by 2027.
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The fast food giant's memo recommends that franchisees allocate funds from their existing marketing budgets to new digital marketing initiatives, which require them to spend at least 4% of their gross sales.
This shift will result in less focus on traditional marketing methods such as TV advertising and more on digital strategies that directly impact sales.
Starting in 2025, U.S. carriers will be required to contribute 1.2% of the projected value of identified digital sales, such as loyalty program logins and delivery orders, to the fund.
This rate is adjusted annually based on sales forecasts at the beginning of each year.
The introduction of the Digital Marketing Fund is expected to increase cash flow for all McDonald's U.S. locations by approximately $2,600 starting in 2025 as digital investment costs are transferred from franchisees' income statements to marketing budgets.
Franchisees in the UK, Canada, Australia and Germany will also contribute to the fund, with other McDonald's markets expected to follow at a later stage.
The company reported net income of $1.93 billion for the first quarter of 2024, an increase of 7.04% compared to $1.8 billion in the same period last year. Revenue increased approximately 5% to $6.16 billion from $5.89 billion in the first quarter of 2023.
