• by Tanya Gazdik , May 9, 2024

McDonald’s will require its U.S. operators to contribute to a new digital marketing fund starting next year.

“The company is recommending that franchisees invest in the fund using their existing marketing contribution,” according to CNBC, which obtained a memo written by U.S. Customer Experience Officer Tariq Hassan and Chief Information Officer Whitney McGinnis.  “The switch is meant to modernize the company’s marketing strategy and widen its competitive advantage as it doubles down on mobile ordering and its digital business.”

The company estimates that the contribution shifts will improve a store’s cash flow by about $2,600 per year.

“The plan is to shift spending away from marketing that has a lower return on investment and into digital marketing," according to Restaurant Business. "It is uncertain what areas of marketing McDonald’s plans to cut to shift spending toward those digital channels, as those decisions will likely be made in conjunction with franchisees. Some of it could come from local marketing.”

The fast food retailer also is planning to invest hundreds of millions of dollars to improve its MyMcDonald’s Rewards loyalty program and add ordering channels, including the ability to place web orders without downloading an app, which should also bolster its digital business.

McDonald’s loyalty program members generated over $6 billion in systemwide sales globally during the first quarter, according to the memo. 

“McDonald’s investment will be focused on innovation and development costs for new products and features whereas franchisees’ investment will fund ongoing operating costs,” according to QSR Magazine. “The different approach will move McDonald’s away from legacy marketing with lower returns and push it toward digital-forward strategies. The company will collaborate with franchisees over the next few months to prioritize investments.”