Some McDonald Corp.’s franchisees aren’t happy with the financial arrangements in the current system of delivering food to customers.
McDonald’s has paired with Uber Eats, Uber’s food delivery app.
According to the company, “McDonald’s has partnered with Uber Eats to get food delivered to hungry customers, allowing you to track your order, customize your drop off location, and use the same account you use to take rides.”
McDonald’s launched its food delivery partnership with Uber Eats in the spring of 2017
But that “McDelivery” system isn’t applauded by all of the company’s franchisees.
According to Nation’s Restaurant News, in a survey of 800 of McDonald’s National Owners Association (NOA) members, “an overwhelming majority said they were not ‘satisfied with the economics’ and were in favor of McDonald’s negotiating a better ‘commission split’ with third-party providers,” like Uber, according to the survey.
Crain’s Chicago Business also reported on the franchisees’ NOA survey and their unhappiness with the Uber partnership, reporting that “the current deal unfairly benefits UberEats and McDonald’s. Right now, UberEats takes a 20 percent cut of every order, according to three franchisees who requested anonymity. Franchisees pay that fee. Then McDonald’s comes in to take its cut. … Franchisees gripe that McDonald’s is currently charging royalties and rent on the full amount of the order, including the 20 percent they never see. This whittles an already slim profit margin to untenable levels, they say.”
And food deliver is extremely important to the bottom line of McDonald’s.
“Over the past two years, delivery has become a $3 billion business for both McDonald’s company and franchise restaurants globally,” CEO Steve Easterbrook said in a late January conference call with investors. He added, “delivery continues to grow rapidly as we expand through additional restaurants and third-party providers as well as benefiting from strong same-store sales momentum. We’re confident this delivery offers additional growth potential for our business. Even with the momentum we already have established, we know we have an opportunity to let more customers know the McDonald’s will bring meals to their homes, offices and college dorm rooms.”
In the latest quarterly earnings report, Easterbrook added: “As we begin 2019, we have confidence in our plan and the continued growth opportunities from delivery.”