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The McDonald's Difference: People Don't Buy Hamburgers Online
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McDonald’s Corp. (NYSE: MCD) posted strong earnings, and did something very few retailers do. McDonald’s management said it would open over 1,000 stores this year. It has and will continue to avoid the onslaught of e-commerce via a simple advantage. Very, very few people can order fast food online.
Global comparable store sales rose 5.5% in the fourth quarter of 2016, an acceleration on top of the full year number of 5.3%. Comparable store numbers in the United States for the full year were up due to the success of “core menu items featured under the McPick 2 platform and beverage value, as well as strong consumer response to the new Buttermilk Crispy Tenders and delivery.” International same-store sales rose 6% for the full year, driven by the United Kingdom and Canada.
Chief Financial Officer Kevin Ozan commented about 2018:
Our development plans also include the opening of about 1,000 new McDonald’s restaurants, 75% of which will be funded by our expanded network of developmental licensees and affiliates around the world. At the same time, we plan to continue making meaningful investments in technology to modernize the customer experience and redefine convenience. I’m confident that now is the opportune time to strategically invest in our business and our restaurants to drive profitable growth and become an even better McDonald’s.
People can order McDonald’s online, but only to send an order to a store for pickup, which is hardly the sort of e-commerce system built by Amazon and almost every other retailer. In the case of traditional retailers, there is a battle between in-store sales and online sales. McDonald’s and other fast-food retailers do not have to face that.
The comment that McDonald’s will not have its business eroded by e-commerce seems obvious, and absurd at first blush, but it is absolutely critical. The largest barrier to retail success faced by almost the entire store-based retail industry does not apply to McDonald’s and probably never will.
The destruction of the brick-and-mortar industry does not, obviously, apply to McDonald’s, which is a critical advantage for its future.
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