McDonald’s Mobile Ordering: Big Revenue, but Bad for Customers?Mobile ordering is a step toward fast-food of the future, but the burger giant has some technical hurdles to clear before it's successful.

 

Taking the lead from Starbucks and Chipotle, McDonald’s is the latest food service chain to introduce mobile ordering. The burger giant began testing its mobile app in select cities last month, and has now announced plans to roll out mobile ordering and payment across all of its 14,000 locations by the end of the year. This announcement comes just after another big change — McDonald’s also recently reported that it would start using fresh beef for its Quarter Pounder patties.

Though the Big Mac creator is late to the mobile ordering world, it will be the first to offer the service nationwide, a huge leap that puts McDonald’s at the front of the fast food pack.

It certainly caught the attention of Wells Fargo. The bank raised its rating on McDonald’s stock and urged investors to buy in as well. Also on team MCD was analyst Jeff Farmer, who said that the burger chain was “establishing a first-mover advantage with digital that [could] drive sustainable share gains in late 2017 and beyond.”

Farmer upped his McDonald’s valuation range to $145 to $150, a 13 percent jump from Thursday’s close. He also increased his 2017 earnings-per-share forecast to $6.22, versus Wall Street’s $6.17 consensus.

As for McDonald’s itself, the burger brand believes its new mobile offering will lure back defected customers. After four years of declining traffic, the chain hopes that the speed and efficiency brought on by mobile ordering will help win back the 500 million customers it’s lost to competitors since 2012.

The problem? Lengthy wait times. Seventy percent of customers coming to the Golden Arches opt for the drive-thru, causing backlogs and bottlenecks. According to QSR Magazine, customers spent an average of more than 208 seconds waiting in the McDonald’s drive-thru in 2016.

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The fast food giant hopes that mobile ordering will eliminate the longest part of the McDonald’s experience — verbally telling your order to an employee. Automating this service should allow crew members to focus on preparing the food and getting it to the delivery lane faster.

However, this hasn’t been the case for other restaurants. Though Starbucks saw rapid customer adoption after it introduced its own mobile ordering system, the influx of mobile orders caused a number of service mishaps.

The company has seen longer pickup lines as staff members struggle to accommodate the onslaught of mobile orders in addition to walk-in customers. The congestion contributed to the company’s 2 percent drop in customer traffic and slow growth in Q1 2017.

McDonald’s is doing a few things differently with its app, though. According to Reuters, the McDonald’s app will track customers via geolocation to ensure their food is sent to the correct restaurant, and the order will only be processed once the customers arrive in the parking lot, ensuring optimal freshness. Customers will also be able to choose among table service, counter or drive-thru pickup and curbside delivery options.

The burger giant may be facing some hurdles when it comes to perfecting the mobile ordering process, but one thing is for sure — McDonald’s mobile ordering adoption is a step toward fast food of the future. According to recent report by BI Intelligence, mobile ordering will account for 10 percent of all fast food sales by 2020, part of an expected $38 billion industry.

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