McDonald’s deal with DoorDash was good for MCD


The pandemic has redirected McDonald’s business to the channels you’d expect: to the drive-thru lane and to food delivery apps like DoorDash and Uber Eats. To roll with it, McDonald’s made adaptations on the fly, but the company couldn’t stop. enjoy the fall, life to become more hectic for storesor the staff shortage that followed the outbreak of COVID-19.

The company has attempted to overcome these obstacles in various ways, including unveil a plan reduce waiting times at the wheel by simplifying the menu. This is one area where it lags behind other fast-food chains, and executives say it worked. However, not much has been said about efficiency on the delivery app side, and it looks like things have been bumpy there as well. According to a new the wall street journal storyDoorDash says McDonald’s locations are filling delivery orders so slowly that wait times for delivery people became a bargaining point in the partnership agreement the two companies just signed a few months ago.

According to the report, starting next year, McDonald’s locations where Dashers have to wait and wait will pay DoorDash a higher commission fee.

Other than that, though, it looks like the deal between DoorDash and McDonald’s is actually pretty good for McDonald’s: DoorDash has agreed to lower the base commission rate, according to the report. Commissions vary by partner restaurant, and due to McDonald’s enormous size, it was able to take advantage of a low rate. Previously, it was 15.5% for all orders. the Newspaper Under the new terms, DoorDash agreed to pocket an upfront commission of 11.6% on regular orders and 14.1% on DashPass subscriber orders.

However, whenever DoorDash is forced to wait, these charges will now increase rapidly. The increase would start at the four-minute mark, then peak at 17.6% for non-DashPass orders where the delivery person waits longer than seven minutes. For DashPass orders, this wait will impose a 20.1% fee on McDonald’s.

A DoorDash spokesperson said the company does not comment on the contracts, but cautioned against assuming these rates apply to every McDonald’s location. “The pricing structures of our merchant partnerships may vary by store or franchisee location and, in practice, may be determined by a variety of factors, including volume, average delivery distance and value-added services, as well as operational performance and quality,” the company said. “Any summary figure is highly misleading. Incentives based on the quality of our platform help reduce Dasher wait times to maximize their revenue and increase customer loyalty and revenue for our merchant partners.

For its part, McDonald’s does not see tying higher prices to individual store performance as a bad thing. “Commission rates are just one thing we consider when establishing these strategic agreements,” the company said. fast business“which often take into account unique and reciprocal business objectives and enable our partners to capitalize on the unparalleled benefits of a global partnership with the world’s largest restaurant company.”

Mark Salebra, president of the National Franchisee Leadership Alliance, seemed to support this claim. “The fact that these long-term agreements are, at their core, designed to financially reward best-in-class services and operations is something we can all support and enthuse,” he said in a statement.

Yet these commission figures, while they vary by store, offer a rare glimpse into the tug of war of pandemic-era negotiations between restaurants and third-party ordering platforms. COVID has resulted in high income for delivery apps like DoorDash. But the profits have always proven to be a challenge. Apps have worked to optimize their AI, so orders are assigned to arriving delivery people precisely as the bag of food slides across the counter. But this technology costs money, and customers now balk at high delivery charges, confused when a $27 dinner goes up to $50 at checkout, after service charges, delivery fees, taxes and the tip.

Meanwhile, partner restaurants also don’t like the high rates they are charged. Last year, DoorDash and Uber Eats responded to that pushback by creating a sliding scale for independent restaurants. These companies can choose to pay between 15% and 30% commission; apps will increase or decrease their marketing and other materials based on the percentage chosen by the restaurant. cities like New York, Chicagoand San Francisco have since stepped in and passed laws capping the maximum commission at 15%, to protect vulnerable small restaurants. But even in cities with no commission caps, McDonald’s new base rate at DoorDash is quite favorable. (Although it’s unclear how extra-high commissions at slower McDonald’s stores would work in cities with 15% caps.)

All of this is why McDonald’s views the DoorDash partnership as a win that should “create a seamless experience for customers, crew and couriers, and establish a solid foundation for future growth.” There’s a largely overlooked part of the new deals McDonald’s has brokered with DoorDash and Uber Eats, and that’s integrating delivery into McDonald’s own smartphone app, which means customers no longer need open or even use the DoorDash or Uber Eats app to complete their orders.


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