McDonald’s New Digital Marketing Plan
In this video, Matt shares some recent news about how McDonald’s wants to change their marketing strategy. However, it doesn’t seem like a great return on investment. We’re hoping it’s a typo in the article.
Video Transcript:
Okay, so this is an article on McDonald’s, the fast food Franchise, is betting on its mobile business with new franchisee digital marketing funds. So they’re requiring all of their franchisees to contribute funds to a digital marketing campaign and they’re targeting it towards their loyalty campaign, their app, and their digital ordering. And they are trying to basically drive more business to their locations by making it easier for people to order ahead and probably instead incentivizing them with you know higher profit menu choices, upsells, cross-sells, whatever, and getting people to come back more often. So if you’re in the restaurant business the way you do well is you build up a loyal base of repeat customers and you get them to come in more often and you get them to spend more each time they come in and ideally spend more on your higher profit products. That’s what McDonald’s is doing here. They’re using their app and they’re investing, they’re asking franchisees to pay into the pool to help them fund this big push and get more people to download the app, and do digital orders, and drive more sales. That’s the whole thing behind it.
What I thought was interesting here in this article was it says as a result of the change McDonald’s is forecasting that every US restaurant will see its cash flow increase by roughly $2,600 starting in 2025. Now I kind of hope that’s a typo because if they’re investing 1.2% of their of their sales into this new marketing effort and they’re only expecting to see $2,600 back that math doesn’t make any sense. If the average McDonald’s sells around $2 million a year then 1% of that right is $20,000. $20,000 into their marketing digital marketing budget and their cash goes up by $2,600, that sounds like a terrible return on that investment. So I’m really hoping that $2,600 is a typo. Maybe it’s 26,000 that would be at least up slightly positive return on that investment, but I’m thinking maybe they’re even hoping for $260,000. That would be, you know, a little more than what 15% or something increase on sales. That starts to make a little more sense for that kind of investment.
But I think the biggest challenge that restaurants are having now is that as they keep raising their prices more and more people are choosing alternatives, to eat at home and do other things. It just becomes ridiculous to spend 30 or 40 dollars to eat at a fast food restaurant for three people for food that’s not especially good. And isn’t especially quick. I spent more than 15 minutes waiting in McDonald’s drive-thru lines only to have 50% of the time the order comes out wrong. And it’s ridiculously expensive compared to what it was even just a few years ago. So I think they’ve got bigger problems than just getting more people to download their app. But I guess that’s a start, right? Everyone has to figure out how to keep their business going and keep having more people coming in spending money or else your business is in trouble.
