McDonald's is making an unprecedented move to win back lost customers (MCD)

McDonald's is forking up a ton of cash to help franchisees fund costly restaurant upgrades in an unprecedented move to win back lost customers. 

This means customers will soon see a lot of changes coming to McDonald's restaurants across the US, as the promise of funding will make franchisees far more willing than in the past to initiate upgrades and remodels.

Specifically, McDonald's is promising to pay 55% of the costs associated with its so-called "Experience of the Future" initiative, which includes installing self-order kiosks, adding new dessert counters, and installing table-locator technology that employees use to deliver customers' food, The Wall Street Journal's Julie Jargon reports.

The new additions can cost between $150,000 to $700,000 per location, according to the Journal, which reviewed a commitment letter from McDonald’s to US franchisees.

McDonald's funding commitment is a first of its kind. The company typically requires franchisees to front the cost of upgrades — whether that's new equipment or total restaurant renovations.

This requirement has led to friction between the company and its operators in the past. Some franchisees have complained that the continuous upgrades have bankrupted them, and forced them to sell their restaurants to larger operators with deeper pockets.


It's not uncommon for McDonald's to initiate upgrade requests to accommodate new menu items or other changes. One of the most recent requests involved McDonald's "Create Your Taste" initiative that involved customizable burgers. Upgrades for the program, which has since been scrapped, reportedly cost between $120,000 and $160,000.

McDonald's is likely offering financing for the new "Experience of the Future" upgrades to speed up the renovations and give franchisees confidence that these changes will be permanent and vital components of McDonald's business strategy going forward.  

As Jargon notes, McDonald's recently told investors that it has lost 500 million US orders to competitors over the past five years.

But McDonald's has been building momentum on the addition of all-day breakfast and new sizes for the chain's iconic Big Mac, which helped lift same-store sales in the US by 1.7% in the most recent quarter. 

Total revenue for the quarter fell by 4% to $5.68 billion.



Trending News

Facebook Lite to launch in developed countries, including United States

Reliance Jio adjusted gross revenue up 21.3% at Rs 5,300 crore in Q3

Angels offer to dematerialise unlisted shares to solve row

Healofy raises $1M seed funding from Omidyar Network

Agritech startups Sabziwala and LivLush merge their business under new entity Kamatan

Myntra brings EMI down to just Rs 50 in sales push

HDFC Bank blocks all its credit and debits cards to buy or trade cryptocurrencies

India to lead in data science job creation: Biocon Chief Kiran Mazumdar-Shaw

Avail Finance lands $17.2M from Matrix Partners & Ola, Freecharge and Flipkart founders

Understanding local nuance is our key competitive edge: Indian Internet firms

SpaceX is launching its broadband satellites into orbit this weekend

Unilever threatens to cut back online ads over 'toxic' content

Google hires former Samsung Mobile CTO to coordinate Internet of Things projects

Go-Jek plans India foray in second half of 2018

Pivoting away from Cube brought us to the right route: PayU's Jitendra Gupta

Ola parent to invest Rs 400 crore to boost Foodpanda India logistics & tech

Alibaba plans tighter integration of Paytm Mall with BigBasket & XpressBees

MakeMyTrip posts wider loss in Q3, may revisit OYO strategy

Google fined Rs 135.86 crore by CCI for 'search bias'

RBI suggests tax sops, self-regulation to build fintech space

Swiggy hires new CEO for its Access Service, gets new CFO

Logistics company Delhivery registers 44% increase in FY17 revenues

WeWork to acquire one of the oldest social networks, Meetup

Toyota, Suzuki to produce electric vehicles for India market by 2020

Qualcomm rejects Broadcom's $103 billion offer

Fashion e-tailer Voonik asks staff to forgo 3 months' salary

EasyRewardz gets $2 million Series-A funding

'Anemic' iPhone 8 demand drags Apple shares lower

Lending platform Lenden Club gets Rs 3.5cr in Equity Investment

On festive sales, Flipkart says 65% clients from Tier-II cities