Revolutionizing Marketing Strategy: McDonald’s U.S. Franchisees to Contribute to Global Digital Fund

McDonald’s U.S. Franchisees to Contribute to Digital Marketing Fund

McDonald’s U.S. franchisees will start contributing to a digital marketing fund next year, as outlined in a memo viewed by CNBC. The change is aimed at expanding the company’s digital business and modernizing its marketing strategy to increase its competitive advantage.

To fund the new digital marketing fund, U.S. franchisees will be required to contribute 1.2% of projected identified digital sales starting next year, with the rate adjusted annually based on projections made at the beginning of each year. This change is expected to result in an increase in cash flow for each U.S. restaurant of around $2,600 starting in 2025, as the digital investment costs will shift from a franchisee’s profit and loss statement to the marketing contribution.

In addition to U.S. franchisees, McDonald’s operators in the U.K., Canada, Australia, and Germany will also contribute to the global digital marketing fund, with other markets expected to follow suit later on. The shift in funding is likely to result in a reduction in traditional marketing tools, like TV commercials, in favor of digital initiatives that directly drive sales.

During the first quarter of 2021, loyalty program members generated over $6 billion in system-wide sales for McDonald’s globally. The company currently has 34 million active digital customers in the U.S., with a goal of reaching 100 million loyalty program members by 2027.

In comparison, Chipotle Mexican Grill has 40 million loyalty members and Starbucks has 32.8 million loyalty members.

McDonald’s plans to invest hundreds of millions of dollars to enhance its loyalty program and add new ordering channels.

The new digital marketing fund aims at increasing McDonald’s competitive advantage by modernizing its marketing strategy and expanding its digital business.