Brief:

• McDonald’s, the burger chain with 36,000 locations in more than 100 countries, has made mobile ordering and payments its biggest priority, CEO Steve Easterbrook said during a conference call to discuss Q2 2017 earnings. The company is on track to have the mobile technology in 20,000 restaurants worldwide, including the 14,000 in the U.S.

• Mobile usage is generating higher average checks per order and helping its restaurants manage peak times, Easterbrook said. He acknowledged that the company’s speed of service has been declining, but he said order accuracy and quality perception scores have improved. He said he hopes the mobile-order and pay app and self-service order kiosks will ease bottlenecks in service.

• Providing a “higher level of convenience and personalization for customers on their terms” is a key part of the chain’s digital strategy, Easterbrook said. That includes its continued rollout with UberEats. Because nearly 75% of the population in its top markets are within three miles of a McDonald's, the company can reach a wider group of customers who previously couldn’t get to a restaurant. With 60% of delivery orders placed at night, McDonald's sees an opportunity to serve more customers during slower periods. 

Insight:

McDonald’s is clearly embracing mobile technology as part of its broader “Experience of the Future” initiative to update the look and feel of its restaurants, revamp its menu with more customized items and provide meal delivery and curbside pickup. The idea is to eliminate “pinch points” that affect the speed of its service. The company ranked fifth in a study of drive-through service times, according to a study by trade magazine QSR last year. McDonald’s 208.16-second average speed of service put it behind Wendy’s, Dunkin’ Donuts, Burger King and KFC.

The chain will see a more than 10-fold increase in the number of U.S. restaurants that have mobile order and pay from about 1,300 now to 14,000 by the fourth quarter, Easterbrook said. The adoption of the technology is accelerating now that the company has gone through a period of testing it out, making improvements and incorporating what’s learned into its processes.

The early results seem to be paying off, although McDonald’s also was very promotional during Q2 2017 with $1 drinks. It also introduced a new line of semi-customizable burgers intended to compete with other chains like Five Guys. Same-store sales rose 6.6% globally and 3.9% in the U.S., beating expectations of 3.7% and 2.9%, respectively. McDonald’s earned $1.4 billion, or $1.70 a share, up from $1.09 billion, or $1.25 a share a year ago. Analysts had forecast $1.62 a share, The Wall Street Journal reported.