MBA Career: Betting on mobile business with new franchisee digital marketing fund

Last Updated on May 10, 2024 by Robert C. Hoopes

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

In a bid to modernize its marketing approach and stay competitive in the increasingly digital world, McDonald’s U.S. franchisees will start paying into a digital marketing fund starting next year. This move comes as part of the company’s strategy to expand its booming digital business and enhance its loyalty program.

McDonald’s plans to invest hundreds of millions of dollars over the next few years to revamp its loyalty program and introduce new ordering channels. In the first quarter alone, loyalty program members generated over $6 billion in sales globally, highlighting the potential for growth in this area. The company aims to reach 100 million loyalty program members by 2027.

Franchisees will fund the new marketing fund using their existing marketing contribution, which currently requires spending at least 4% of gross sales. The new fund will be financed based on projected identified digital sales, with U.S. operators contributing 1.2%. McDonald’s projects that every U.S. restaurant will see a $2,600 increase in cash flow starting in 2025 as a result of this change.

Not only U.S. franchisees, but those in the U.K., Canada, Australia, and Germany will also be contributing to the global digital marketing fund. Other markets are expected to transition to this approach in the future, reflecting McDonald’s commitment to leveraging digital channels to drive growth.

This initiative marks a significant step for McDonald’s in embracing the digital age and leveraging technology to enhance its marketing efforts. With the global shift towards digital platforms, this move is likely to strengthen McDonald’s position in the market and drive further growth in the years to come.