Predicting Uber's profitability
Delivery Showdown: Can McDonald’s Recover Amid E. Coli Fallout?
Introduction
2024 has been an interesting year for McDonald’s, the world’s leading fast-food chain. Despite its global dominance, McDonald’s is navigating a maze of challenges, from declining sales and intensifying competition to external crises that have shaken consumer confidence. For investors, financial analysts, and hedge funds, the fast-food giant’s recent struggles are more than just short-term hiccups; they reflect more profound questions about its ability to adapt to an increasingly competitive and digital-first delivery landscape.
This report takes a closer look at the dynamics shaping McDonald’s performance, from external shocks to strategic initiatives, offering a comprehensive analysis of the company’s position in the evolving fast-food delivery market.
Contents
Unpacking Opportunities for Investors: the $150 Billion global delivery boom
Fast-food delivery has undergone a seismic shift, transforming from a niche convenience into a core revenue stream for major players. For McDonald’s, delivery now accounts for over 10% of sales in participating locations, with higher average transaction values than in-store purchases. According to Skift Table, the average McDonald’s delivery check size is about 50% higher than the in-store check size. This shift reflects a broader trend: consumers prioritize convenience and digital accessibility in their dining choices, making delivery a critical battleground for fast-food giants.
It’s It’s All Goods Inc notes that 78% of consumers value convenience more now than before the pandemic, and the food delivery market is now worth more than $150 billion globally. This underscores the importance of digital ordering and delivery services for fast-food chains like McDonald’s to remain competitive in the current market.
Mcdonald's delivery dilema: Lessons in crisis and resilience
McDonald’s 2024 performance underscores several key takeaways for investors. Leveraging data and insights, particularly from platforms like Gridwise Analytics, can provide a sharper lens into these challenges and opportunities:
Delivery as a Growth Driver: While delivery is a vital revenue stream, its success is consistent execution. Gridwise Analytics offers granular delivery performance data that can help investors track trends in consumer behavior, order frequency, and delivery efficiency. By identifying patterns, investors can better evaluate McDonald’s ability to stabilize and grow its delivery channel.
Operational Vulnerabilities: External crises like the E. coli outbreak reveal gaps in operational resilience. Gridwise Analytics enables detailed analysis of market dynamics during such disruptions through its first-party gig mobility data. For example, tracking shifts in driver availability, delivery delays, and customer retention metrics could highlight areas where McDonald’s needs to strengthen its operations.
- Competitive Pressures: McDonald’s must counter competitors like Chick-fil-A, Taco Bell, and Burger King, which excel in delivery efficiency and customer loyalty. Gridwise Analytics’ benchmarking tools provide insights into competitor delivery volumes, consumer satisfaction scores, and market share trends, empowering investors to gauge McDonald’s standing against industry leaders.
- Strategic Decision-Making: Leveraging data-driven insights from Gridwise Analytics, investors can assess the impact of McDonald’s investments in technology, menu innovation, and delivery expansion. Metrics such as driver retention, geographic delivery growth, and order batching efficiency can offer a clearer picture of McDonald’s ROI on its strategic initiatives.
Source: Gridwise Analytics / Timeframe: Jan 2022–October 2024
This incident highlighted the vulnerability of fast-food chains to food safety issues and the critical importance of robust crisis management strategies. While the impact of the health crisis may be short lived, it does underscore a broader issue of declining delivery sales for McDonald’s throughout all of 2024.
Other Factors Influencing McDonald’s Delivery Performance
1. Macroeconomic Challenges
An increase in driver pay may suggest supply constraints, pushing Uber to pay drivers more. However, it could also reflect higher customer charges driven by demand. As we head into Q4, tracking whether base pay continues to rise will be crucial. A sharper increase in driver base pay could signal deeper supply issues, potentially driving up both operational and driver acquisition costs.
2. Shifting Consumer Behavior
The rise of deal-seeking behavior—where consumers actively compare options across platforms and restaurants to find the best value—has intensified the challenge of retaining loyal customers. In 2024, price sensitivity among consumers has grown due to inflation and economic pressures, prompting many to opt for competitors offering more attractive pricing or incentives.
McDonald’s has struggled to counter this trend effectively, mainly as rivals like Chick-fil-A, Taco Bell, and Burger King focus on delivering both value and convenience. The frequent switching of customers to competitors erodes McDonald’s delivery demand, underscoring the importance of implementing competitive pricing strategies and enhancing customer loyalty initiatives.
3. Intensifying Competition among QSRs
The competitive fast-food landscape in 2024 is fiercer than ever. Rivals such as Chick-fil-A and Taco Bell have aggressively expanded their delivery operations, leveraging operational efficiencies, superior customer service, and strategic promotions to attract new and existing customers. According to delivery data, these brands have maintained strong delivery performance and successfully captured a market share during McDonald’s periods of crisis.
Though less aggressive in its promotional strategies, Burger King has shown steady growth by focusing on incremental improvements in delivery services and maintaining a consistent value proposition. Popeyes has also made gains in the delivery space, benefiting from its strong brand equity and targeted marketing campaigns.
In this crowded market, McDonald’s faces a dual challenge: It must recover from recent setbacks and innovate to differentiate itself from competitors that have capitalized on operational excellence and customer-centric strategies.
Crisis to Opportunity: Strategic Takeaways from McDonald’s Delivery for Investors
1. Seize Market Opportunities with Consumer-Driven Insights
Gridwise Analytics equips investors with data on emerging consumer preferences, competitive positioning, and evolving delivery trends. By tracking shifts in customer behavior—such as increased demand for convenience or loyalty to brands offering superior service—investors can identify opportunities for QSRs to capture market share and stay ahead in a fast-paced delivery economy.2. Strengthen Operational Performance to Overcome Vulnerabilities
Data on driver availability, delivery delays, and order batching efficiency allows investors to pinpoint weaknesses in QSR delivery networks. For instance, disruptions like ingredient shortages or rising operational costs can reveal vulnerabilities. Insights into how QSRs like Chick-fil-A maintain resilience during such challenges provide a roadmap for overcoming obstacles.3. Identify Growth Potential in High-Impact Areas
Gridwise Analytics’ detailed metrics on market share and delivery efficiency enable investors to evaluate growth opportunities across the QSR sector. Identifying high-demand locations, improving delivery logistics, or deploying innovative solutions like AI-driven order management helps chains like Taco Bell and Burger King expand their operations and boost ROI.4. Outpace Your Competitors with Targeted Benchmarking
Through Gridwise’s comparative analysis tools, investors can assess QSR delivery performance relative to competitors. For example, benchmarking Taco Bell’s promotional strategies against McDonald’s or analyzing Chick-fil-A’s customer retention rates reveals actionable insights to refine strategies and strengthen market positioning.5. Turn Data into Winning Strategic Moves
With access to data from 400+ million trips and $4 billion in gig earnings tracked, Gridwise Analytics empowers investors to transform insights into actionable strategies. Evaluating the financial impact of delivery innovations or projecting returns on operational upgrades helps QSRs deliver measurable growth, efficiency, and profitability. By leveraging Gridwise Analytics, investors gain a strategic advantage in understanding delivery performance across the QSR sector, ensuring that their investment decisions are backed by data-driven insights and market expertise.The strategic value of gig mobility data
Gig Mobility Data
The gig economy has revolutionized how people work and how businesses operate. With over 500,000 gig workers in the U.S. alone, the market for ride-hailing, delivery, and freelance services is expanding rapidly. This shift presents financial services firms with a unique opportunity to access data that provides real-time visibility into platform performance.
Data is no longer a luxury – it’s a necessity. Investment firms, analysts, and portfolio managers increasingly rely on gig mobility data to evaluate market trends and assess company performance. Whether it’s tracking earnings per trip, monitoring platform expansion, or understanding driver retention, having access to reliable, real-time data can make or break an investment decision.
That’s where Gridwise Analytics comes in. We gather and process anonymized data from millions of gig worker trips, providing financial firms with deep insights into the gig economy. With data correlated to publicly reported gig platform metrics, our analytics offer a complete view of the operational health of companies like Uber, DoorDash, and Lyft.
Up to
correlation
Gridwise Analytics is highly correlated to publicly reported metrics
NYC metro average daily trips
Source: Gridwise Analytics / Timeframe: Jan 2019–Mar 2023 / Geography: New York City, NY
Contents
