Bloomberg News

McDonald’s Tests McD App at 1,000 Stores to Lure Millennials (1)

December 12, 2013

McDonald’s Corp. (MCD:US) is testing a mobile application in 1,000 stores as it tries to lure younger diners at a time when U.S. sales are struggling.

Called the McD, the app sends customers offers they can redeem with their phones at participating stores, Lisa McComb, a company spokeswoman, said in an e-mail. Diners can specify what kind of deals they want to receive, including “buy a breakfast sandwich get one free or $1 Hot ’n Spicy McChicken sandwich.” Users can’t order or pay with the McD app.

The world’s largest burger chain has been experimenting with various mobile programs as it seeks to compete with such chains as Five Guys Burgers and Fries and Chipotle Mexican Grill Inc. (CMG:US), which both offer mobile ordering apps and attract a generally younger and higher-income crowd.

It remains to be seen whether a mobile app will help draw millennials, Sara Senatore, a New York-based analyst at Sanford C. Bernstein & Co., said in an interview.

Companies with a “younger and potentially more affluent customer base” have more success with mobile apps, Senatore said. “The McDonald’s customer tends to be slightly older.”

In September, McDonald’s said some locations in Salt Lake City and Austin, Texas, were trying out a mobile payment app. In October, the Big Mac seller named Atif Rafiq to the newly created role of chief digital officer. Rafiq, who is leading efforts to roll out a mobile app nationally, previously ran Amazon.com Inc.’s (AMZN:US) Kindle Direct Publishing unit.

Digital Push

McDonald’s sees digital and mobile as “increasingly critical in the U.S.,” Senatore said. Creating the chief digital officer position is “a recognition that this is a meaningful avenue for driving sales.”

McDonald’s began testing McD about a year ago in San Francisco and in the past month expanded it to St. Louis and Boston. While the app, created by Palo Alto, California-based Mowingo Inc., can be downloaded anywhere, deals are only good in participating areas, McComb said.

On Nov. 25, the Oak Brook, Illinois-based company filed a trademark for McD to be used as “downloadable software in the nature of a mobile application in the field of restaurant services, food delivery services and restaurant locator,” according to the U.S. Patent and Trademark Office website.

“It’s premature to speculate on the future of the McD App,” McComb said.

Sales at U.S. stores open at least 13 months dropped 0.8 percent in November, McDonald’s said on Dec. 9. Monthly U.S. same-store sales haven’t gained more than 1 percent since July.

The shares fell (MCD:US) 1.2 percent to $94.10 at the close in New York. They have advanced 6.7 percent this year, trailing the 19 percent gain for the Standard & Poor’s 500 Restaurants Index.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $94.78 USD
    • 0.95
    • 1.0%
  • CMG
    (Chipotle Mexican Grill Inc)
    • $678.06 USD
    • 5.27
    • 0.78%
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