If you trace back four or five years ago, McDonald’s was spending on technology, but nobody was talking about it. It was back-of-the house moves “to keep the restaurants operating,” as chief executive officer Steve Easterbrook put it during Tuesday’s quarterly earnings call.
“Our belief is those who are not investing in technology at some point will be behind and will need to catch-up,” said chief financial officer Kevin Ozan. “We would rather be a little bit ahead of the curve and spend the amount that we think will drive future growth.”
“The world is different than it was in 1955. Different today than even it was four years ago when we launched our turnaround,” Easterbrook said. “We’re keenly aware that we have to be ahead of these changes, investing, executing, and growing with a deep sense of urgency and purpose.”
Easterbrook said average franchisee restaurants cash flow was “moving in the right direction” with 11 consecutive months of growth through September.
“Whether we look across the tech or consumer world, we see voice technology playing an increasing role in all our lives. And for McDonald’s, this is particularly significant because of the importance of drive-thrus to our portfolio,” Easterbrook said.
If you factor in ‘Experience of the Future’ remodel capital (1,500 converted stores so far this year and 2,000 expected by 2020), these changes have stirred some short-term financial headwinds for McDonalds, like lower gains on sales of restaurants.
However, McDonald’s has broadened its U.S. reach this year by adding DoorDash and GrubHub after exclusively operating with UberEats, Easterbook said. McDonald’s witnessed an increase in average restaurant McDelivery orders in units when it brought on DoorDash. “Delivery remains a big frontier for our business, and we still have a long way to go, even with our existing customers. To illustrate how sizable this frontier is, Easterbrook added that customers are currently placing 10 delivery orders per second on average globally.
McDelivery will expand to more than 10,000 restaurants nationwide by the end of the year, covering over 70 percent of the U.S. system.
