Uber Eats has taken a supersized bite out of McDonald's
Ever so quietly, Uber Eats has taken a big bite out of McDonald’s (MCD) operations.
Uber Eats is now available at a whopping 9,000 of the fast-food giant’s 14,000-plus U.S. locations, McDonald’s U.S. President Chris Kempczinski told Yahoo Finance. Kempczinki was speaking Tuesday evening during a media gathering inside McDonald’s swank new three-story flagship restaurant opening this week in New York City’s Times Square.
The number of McDonald’s U.S. locations with Uber Eats availability had not been previously released.
Kempczinski — who joined McDonald’s in 2015 from Kraft Foods — said Uber Eats represents about 2% to 3% of McDonald’s U.S. business. But the average is deceiving Kempczinski said — in some locations, near college campuses, Uber Eats could represent 15% of sales as lazy carless kids order to their dorm rooms. At others, the Uber Eats influence is negligible as it’s quicker to just hit the drive-thru.
“We are still learning where that business could go — certainly we expect delivery to keep growing,” Kempczinski said. The impact of Uber Eats is causing McDonald’s executives to rethink some areas of its operations moving forward.
“Well, we are certainly going to have to start thinking about packaging that is specific to delivery. We are starting to see when the profile of people order is different, more around late night and dinner — that affects staffing,” explained Kempczinski. “And then it impacts menu strategy. For example, do you continue to sell fountain drinks or do you have bottles and cans that you can offer through delivery.”
McDonald’s was early with Uber Eats
The Golden Arches joined forced with Uber Eats in 2017 via an exclusive partnership. Under terms of the deal, Uber Eats became the sole food delivery agent for McDonald’s. It collects a $1.99 fee and a piece of the sales from franchisees.
This new massive #McDonalds opening tomorrow in Times Square is insane $MCD https://t.co/pgZI2u0Bbb
— Brian Sozzi (@BrianSozzi) May 28, 2019
The partnership was touted by Uber during the road to its hotly anticipated May initial public offering. In its prospectus, Uber (UBER) said it delivers McDonald’s food at some 13,000 locations globally.
More recently, McDonald’s has reportedly moved to end its exclusive relationship with Uber Eats and adjust fees paid by franchisees. Doing so would give consumers more delivery options and potentially lower the costs (for diners and franchisees). That could mean even greater sales for McDonald’s.
Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi
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