McDonald’s today announced a pair of deals with DoorDash and Uber Eats, opening the door for delivery to be integrated in McDonald’s mobile app and giving more favorable terms to McDonald’s franchisees. Details of the deals were not disclosed publicly, and it should theoretically not change the consumer experience, but McDonald’s touted potential for higher profits and more control. The company got into delivery in 2017 via an exclusive deal with Uber Eats, and delivery services have become more important to the bottom line than ever since the start of the covid-19 pandemic popularized ordering in from virtually any restaurant.
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In 2017, there were fewer than 5,000 McDonald’s locations offering delivery. Now, more than 30,000 of the company’s 39,000 restaurants have the feature.
“What we’re trying to do with these conversations is leverage the fact that we are the largest restaurant company in the world, that we have an ability to drive traffic onto their apps that we think is second to none,” CEO Chris Kempczinski told analysts in October (via Restaurant Business). “And that should be reflected in the rates that we’re paying.”
According to that same Restaurant Business report, about 20% of McDonald’s global revenue now comes from digital sales. While curbside or in-restaurant pickup have become more common in the last year, it’s safe to assume a big chunk of that estimated $13 billion in digital sales comes from delivery orders.
In the past, the high cost of commissions paid to delivery companies had eaten into McDonald’s ability to turn a profit with the service. Uber Eats typically takes between 15% and 30% of the order’s cost to provide the restaurant with delivery services. While McDonald’s has always been at the low end of that scale, that’s still double digits, mostly on items that are already fairly low cost and low margin. Other delivery services like DoorDash and Postmates have similar deals. At present, about 13,000 McDonald’s locations use DoorDash, with a number of other vendors providing services but Uber Eats dominating most of the non-DoorDash markets.
