Brief:

• McDonald’s CEO Steve Easterbrook said customer adoption of its mobile app is “pretty low” and the burger chain plans to work on improving the user experience, training employees and making the technology more reliable. Speaking to analysts and investors on a quarterly earnings call, Easterbrook said the app had the biggest effect on boosting curbside pickup.

• Mobile order and pay, which McDonald’s started testing a year ago, is available in more than 20,000 restaurants of its 36,000 worldwide. But Easterbrook said the company isn’t going to put a bigger marketing push behind the app until it works on improvements because “it’s pretty inevitable that our customers will increasingly engage with us as a brand and as a business through their phones.”

• McDonald’s reported a 5.5% increase in sales during Q1 2018 from a year earlier, beating estimates for a 3.7% gain, per CNBC. Same-store sales rose 2.9% in the U.S., helping to drive the 11th straight quarter of positive comparable sales growth.

Insight:

While Easterbrook had more modest ambitions for the mobile app, some promotions performed very well and the executive's statements indicate he has high expectations for the app in the future. Mobile ordering can be tricky for quick-serve restaurants to integrate, as McDonald's and others have found, because it requires tweaking behind-the-counter operations so that orders placed via mobile don't interfere with serving in-store customers in a timely way. McDonald's appears to moving slowly with the app so it can insure the customer experience doesn't suffer. 

McDonald’s CEO Easterbrook offered a more measured assessment of how mobile order and pay is affecting sales after the company aggressively expanded the service throughout its 14,000 locations in the U.S. last year and into foreign markets such as Canada, the U.K., Germany, Australia and China. The app can use geolocation technology to tell when a customer is nearby in order to start preparing an order, and customers can choose to pick up their orders at the counter, drive-thru or newly added curbside delivery.

 In Germany, McDonald's launched the mobile app with an Easter Countdown Calendar, offering 32 straight days of different offers only available through the app. The promotion led to more than 5 million downloads, making it the most downloaded app in Germany in February. It also drove business results: double-digit comp sales increases and the best guest count growth in 12 years, Easterbrook said in the conference call.

McDonald’s also has plans to accelerate its “Experience of the Future” concept this year, which includes revamped stores with tech like touchscreen order points and Uber Eats delivery service in global markets. Menu innovations include flat white coffees and “gourmet” fresh beef burgers to appeal to younger, health-conscious consumers. McDonald's has committed $2.4 billion to this initiative in the United States with a goal of remodeling 1,000 stores a quarter this year, per The Drum.