Contactless transactions have been in the headlines since the pandemic changed the way that consumers shop and buy everything from retail merchandise to groceries to prepared food. Merchants that already had the tools to make contactless shopping easy for consumers through their websites and mobile apps were early winners, while merchants that were able to pivot quickly into omnichannel commerce quickly caught up. McDonald’s may be an example of the latter, but the results that they have realized through their omnichannel strategy are first-rate. In the first 3 quarters of fiscal year 2021, McDonald’s has seen over 20% of its sales in its top six markets come through digital channels. In addition, McDonald’s now offers delivery from over 32,000 restaurants in 100 countries, up from 3,000 only a year ago.
Driving its digital strategy is a new rewards program that has enrolled over 21 million users in the US alone since its launch a few months ago. In China, another top market for McDonald’s, its loyalty program has enrolled over 100 million users. Sales aren’t the only benefit McDonald’s is seeing from its digital strategy; online ordering and payment by customers means that a store associate doesn’t need to spend time on these tasks. In the current labor market, this has made McDonald’s more resilient to staffing shortages, since it can focus more of the in-store crew on preparing and serving food, and fewer on taking orders and payments at the counter or drive-thru.
The real proof is in the profits, though, as McDonald’s executives forecast operating margins for this fiscal year in low 40% range. Worth noting here is that McDonald’s has only achieved margins above 40% twice in the last decade, indicating that its omnichannel capabilities are making a strong contribution.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group
