facebookWhy I'm Lovin' McDonald’s (NYSE: MCD) New Rewards Program
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Why I'm Lovin' McDonald’s (NYSE: MCD) New Rewards Program

profileSudhan P

While KFC’s Cheesy Zinger Triple Down will be available in Singapore from today till 3 July, something’s brewing at a rival fast-food restaurant chain some 15,00 kilometres away.

McDonald’s Corp (NYSE: MCD) announced that its loyalty program in the US will be launched countrywide on 8 July 2021.

Dubbed “MyMcDonald’s Rewards”, the program allows patrons to unlock freebies simply by purchasing their favourite McDonald’s items.

Source: McDonald’s

McDonald’s is late to the loyalty game, but it’s certainly a step in the right direction.

McDonald’s shareholders should take notice of the loyalty program as it’s likely to accelerate the restaurant chain’s growth for years to come.

How Does MyMcDonald’s Rewards Work?

Foodies will receive 100 points for every US$1 spent on qualifying purchases at McDonald’s.

There are different tiers of rewards that users can unlock, with a total of 16 reward options. A Happy Meal or Big Mac redemption will “cost” 6,000 points.

Source: McDonald’s

For the first order using MyMcDonald’s Rewards, fans will automatically get 1,500 points that can be used to redeem either Hash Browns, Vanilla Cone, Cheeseburger, or a McChicken.

The loyalty program will be available no matter how or where users purchase their favourite food items — through kiosks in the restaurants, digital menu boards at the Drive Thru, McDelivery, or via its mobile app.

Benefits of MyMcDonald’s Rewards

The benefits for loyal fans are obvious. The more they spend at McDonald’s, the more points they’ll accumulate to redeem food and drink items.

The new loyalty program will also allow personalised service that’s more customised and rewarding for members.

For instance, McDonald’s workers will greet loyalty members by name as they move through the drive-thru lane, elevating the customer experience.

Customers will also receive a personalised email that includes upcoming deals tailored to their needs after they pick up their orders.

Source: Giphy

For the restaurant chain, though, the benefits are upsized.

MyMcDonald’s Rewards program gives the company insights into customers’ purchase decisions.

The data could allow McDonald’s to personalise promotions for members and incentivise customers to stop by restaurants during the lull periods.

The loyalty program can also help to grow McDonald’s base of loyal customers and encourage repeat purchases, generating recurring revenue for the restaurant chain.

In a press statement, McDonald’s said that MyMcDonald’s Rewards is part of its new digital experience growth engine that aims to provide a fast, seamless McDonald’s experience.

Taking a Leaf from the Rewards Playbook

Amid the pandemic last year, McDonald’s customers used its app more than ever before, as digital sales exceeded US$10 billion — contributing nearly 20% of Systemwide sales — across its top six markets.

Systemwide sales refer to revenue from all McDonald’s restaurants, whether operated by the company or by franchisees.

McDonald’s has 40 million active app users in just its top six markets and millions more around the world.

The loyalty program should help to hold onto the digital customers the companies gained during the pandemic.

McDonald’s rivals such as Starbucks and Chipotle Mexican Grill have rewards programs that have grown their base of loyal customers and encouraged more frequent visits.

For instance, around 50% of Starbucks 2020 revenue was generated by its Starbucks Rewards loyalty program members. For the year, its loyalty program 90-day active members in the U.S. increased 10% year-on-year to 19.3 million.

41% of McDonald’s total revenue last year came from the US. If successful, McDonald’s can slowly roll out the rewards program to other major markets.

In its 2021 first-quarter earnings call, McDonald’s president Joe Erlinger shed light on the success of its rewards trials in two test areas (emphases are mine):

“In our two test-and-learn markets, Phoenix and New England, we’re encouraged by the initial results. User adoption, as measured by guests ordering through the app, are up significantly since the test began. Frequency has increased. In fact, our loyalty customers are far more likely to return in the next 30 days compared to non-loyalty customers. And customer satisfaction is up. Customers love the personalized experience of being greeted by their first name.”

It’ll be interesting to watch over the next few months how the US-wide launch of MyMcDonald’s Rewards positively impacts the fast-food company’s business.

Now the question is, when will MyMcDonald’s Rewards be launched in Singapore? McDonald’s, if you read this and can divulge the secret, please reach out to us.

Source: Giphy

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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