McDonald’s will introduce a requirement for its US franchisees to contribute to a new digital marketing fund from 2025 onwards, as reported by CNBC. This move aims to bolster its digital business.
Outlined in a memo by McDonald’s US customer experience officer Tariq Hassan and chief information officer Whitney McGinnis, this strategic maneuver aims to modernize the company’s marketing strategies and enhance its competitive advantage.
The corporation intends to make substantial investments in enhancing its loyalty program and implementing additional ordering channels, such as web-based orders, eliminating the need for an app.
This investment aligns with McDonald’s strategy to revamp its marketing approach and uphold its competitive edge.
Continue Exploring: McDonald’s UK delights fans with anime-themed Happy Meal featuring Yu-Gi-Oh! X and Hello Kitty toys!
With loyalty program members driving over $6 billion in global sales in the first quarter of 2024, McDonald’s, boasting 34 million active digital customers in the US, aims to broaden its digital customer base.
The company’s goal is to achieve 100 million members in its loyalty program by 2027.
According to the memo from the fast-food giant, franchisees are advised to designate funds for the new digital marketing initiative from their current marketing budget, requiring a minimum expenditure of 4% of total sales.
This transition is expected to lead to a decreased emphasis on traditional marketing approaches like TV advertising, in favor of digital strategies that have a more direct impact on sales.
Beginning in 2025, US operators will need to allocate 1.2% of anticipated digital sales, including activities like loyalty program logins or delivery orders, to the fund.
Annually, this rate will be revised based on sales projections at the start of each year.
Continue Exploring: McDonald’s and Krispy Kreme join forces to bring doughnuts to all US outlets
The implementation of the digital marketing fund is expected to increase cash flow for each US McDonald’s restaurant by around $2,600 starting in 2025, as the costs of digital investment will shift from franchisee profit and loss statements to the marketing budget.
Franchisees in the UK, Canada, Australia, and Germany will also participate in contributing to the fund, with other McDonald’s markets expected to join at a later time.
In the first quarter of 2024, the company disclosed a net income of $1.93 billion, marking a 7.04% rise from $1.8 billion the previous year. Its revenues also surged by nearly 5% to $6.16 billion from $5.89 billion in the first quarter of 2023.
