McDonald's expands Uber delivery after successful test

Dive Brief:

·         Uber and fast-food chain McDonald’s are building their mobile ordering and delivery service with the addition of several cities by the end of June, according to a report in Crain's Chicago Business. The ride-hailing service’s UberEats application has been in tests with about 220 McDonald’s stores in Miami, Orlando and Tampa since January. McDonald’s didn’t say which cities will be part of the expansion during its quarterly call with investors this week.

• The UberEats app, which is replacing the UberRush service that will be shuttered on May 8, has allowed mobile users to order anything from the regular McDonald’s menu. The restaurants package the meal for delivery and hand it off to an Uber driver. A flat fee of $4.99 is added to the customer’s Uber bill.

·         McDonald’s Chief Executive Officer Steve Easterbrook said the company will gradually "put more marketing muscle" behind the delivery service as it gets more experience with mobile ordering and customers change their behaviors.

Dive Insight:

Uber needs some public victories after this year’s repeated scandals, including sexual harassment allegations, a viral video of CEO Travis Kalanick’s argument with a chauffeur and a lawsuit from drivers for Lyft, a major competitor. Demonstrating that UberEats delivery can help build business for a major established brand like McDonald’s would improve Uber’s image.

UberEats delivery is also important for McDonald’s, which has struggled to regain relevance as consumer's eating habits have changed by improving customer service and revamping its menu to appeal to millennials — who like to eat out or order in but often not with fast food chains. A top McDonald’s franchisee last year found that 80% of that key demographic had never tried a Big Mac, according to a report by The Wall Street Journal.

UberEats looks like a good fit for McDonald’s, which gets about 70% of its U.S. business from drive-through windows, while urban customers are more likely to take food to go instead of dining in the restaurant, Crain’s Chicago Business reported. Apps like Caviar, DoorDash, GrubHub, Postmates, Seamless and Yelp Eat24 also provide McDonald’s ordering in some regions.

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