McDonald's Creates New Unit To Focus On Global Digital App; Big Sales Growth Expected As Labour Crunch Looms
McDonald's Corp is bringing its digital, data analytics, marketing, restaurant development and operations segments into one unit as it focuses on driving growth through its global app and new MyMcDonald's Rewards programme, the company has said.
The company rolled out MyMcDonald's Rewards on July 8 as fast-food chains have raced to launch loyalty programs to spur sales, reach younger consumers and give customers more ways to order.
To lead the new unit, McDonald's promoted Manu Steijaert to a new global chief customer officer position, effective August 1 and reporting to CEO Chris Kempczinski.
Steijaert previously ran international operated markets including European countries, Russia, and Australia.
Nearly half of all restaurant customers use at least one loyalty program, particularly when ordering fast-food, according to a consumer survey from loyalty program provider Paytronix Systems Inc and PYMNTS.com.
The programmes rake in valuable data about customers' food orders and habits, which restaurants use to push specialised deals in the hope of getting people to eat there more often and spend more money on extra items.
McDonald's has more than 40 million active app users in its biggest six markets and now offers delivery in more than 30,000 restaurants, Kempczinski said in an internal message seen by Reuters.
The company created the team "to remove some internal barriers and silos that ultimately lead to a fragmented customer experience," Kempczinski said in the memo.
Big Sales Growth Expected As Labour Crunch Looms
McDonald's BTS celebrity meals and crispy chicken sandwiches are expected to fuel a US sales increase of 24% when the company reports second-quarter earnings this week, but analysts are eyeing whether labor shortages could slow growth.
If results for McDonald's fall short of the mark, the lack of cooks and cashiers could be a culprit, along with competition from other restaurants reopening, independent analyst Mark Kalinowski said in a research note.
As the United States and other economies move toward emerging from the COVID-19 pandemic, an increase in demand for food and goods is exacerbating a shortage of servers, retail workers, truckers, and delivery drivers.
That crunch is causing slow service and menu outages.
Kempczinski told investors in June that the competition for workers is likely to persist for some time, according to a transcript from a Bernstein conference.
Many fast-food chains have recovered to pre-pandemic sales levels and are expected to keep reporting strong earnings as customers use drive-thrus and digital apps to place contactless orders for quick family meals.
However, some of McDonald's Corp's franchisees are cutting operating hours because of staffing problems and seeing sales drop as competitors reopen, according to a survey by Kalinowski.
Domino's Pizza Inc said on Thursday July 22 that delays in delivery of equipment because of global supply chain logjams - as well as low staffing levels and construction and permitting delays - has slowed a number of new store openings.
Some analysts expect McDonald's US sales to beat estimates, including Nick Setyan of Wedbush Securities, who pointed to new menu items such as the new line of chicken sandwiches, increased marketing spending, and growing adoption of the company's app for ordering.
McDonald's also launched a new celebrity meal with the South Korean boy band BTS and gave away French fries on Fridays to app users that likely helped boost sales in the quarter.
International sales, which weighed on McDonald's global sales in recent quarters, may recover as COVID-19 cases fell in France, Germany, Canada, Spain, and Italy and vaccination rates in some of those countries doubled, wrote Gordon Haskett analyst Jeff Farmer.
Analysts expect sales in those international operated markets to rise 65%, according to Refinitiv data from IBES.