McDonald’s: Loyalty scheme will enable ‘even smarter’ pricing

McDonald’s hopes its expanding loyalty scheme will enable it to “get even smarter” with its pricing methodology, asserts the company’s CEO Chris Kempczinski.

Speaking to investors today (5 February), the company outlined that maintaining the “balance” between price growth and footfall growth is a “North Star” for the business. Kempczinski believes it is a brand which is “set up well to get that balance right”.

“McDonald’s position on value is a competitive advantage with a strategy rooted in customer behaviours and insights,” he added. “We are optimising price while limiting customer resistance.”

This year will continue to see consumers be “more discriminating with their dollars”, he predicted, but added that McDonald’s has the toolkit to continue growth in the year.

The brand’s loyalty scheme will allow it to improve its price strategy, he claimed.

“As we continue to attract millions of new loyalty members, we can get even smarter with our pricing methodology and tailor our digital offers to our fans, making them even more personalised,” he said.

We’re excited about what this says about our potential to test, learn and innovate quickly.

Chris Kempczinski, McDonald’s

Sales to loyalty members reached over $20bn (£15.96bn) in 2023, the fast food giant reported, up 45% versus 2022 levels. It also reports over 150 million active users of its schemes.

While it is pleased with the progress, these loyalty scheme members represent “only a fraction of [its] total customers”, says Kempczinski. The business has set itself a target of having 250 million active scheme members, generating yearly sales of $45bn (£35.9bn), by 2027.

McDonald’s “biggest” opportunity to acquire new customers and build more frequent and more valuable customer interactions is by “aggressively” investing in digital and technology, says Kempczinki.

How McDonald’s made marketing its centre for growth

This means both in its loyalty schemes and platforms for consumers, and in its operating platform for its franchisees and staff. In consumer-facing digital offerings, the company highlighted the UK initiative ‘Festive Wins’.

The promotional initiative gave McDonald’s users the chance to win prizes and access to special offers each day in November. It boosted digital engagement to an “all-time high” for McDonald’s UK and generated four million active monthly customers, Kempczinski said.

McDonald’s also highlighted its ‘One McDonald’s Way’ approach, which sees it scale its “best ideas” in marketing through “common tools and processes that help [it] maximise return on investment”.

As well as its ability to share winning ideas, Kempczinski underlined McDonald’s ability to innovate. Around one year ago, the company set up a new business ventures team “designed to operate as an entrepreneurial startup within McDonald’s”.

That team identified an opportunity for the brand in its key markets in the beverage-led occasion category. As a result, it launched a trial of CosMc’s, a small format ten restaurant trial focused on beverages and treats.

McDonald’s CEO: ‘Innovating and reinventing’ brand even when successful is crucial

“We’re excited about what this says about our potential to test, learn and innovate quickly,” Kempczinski said.

In the full year, McDonald’s saw its global comparable sales grow 9% versus 2022 levels. Sales growth slowed in the fourth quarter, growing 3.4% versus the same period last year.