McDonald's eliminates its CMO and forms a new partnership with DoorDash: What is the future of marketing and delivery business?
McDonald’s just announced a new organizational structure in its marketing division and a new partnership with DoorDash. Is McDonald’s betting on the right trends in today’s tough market for restaurants?
McDonald’s chief marketing officer (CMO) is replaced with two SVPs
McDonald’s Global CMO, Silvia Lagnado will be leaving the company in October, but there is no direct replacement for such a prominent position. Instead, the company promoted two men who reported to Lagnado to two newly-created positions at the senior VP level, including SVP Global Marketing and SVP Marketing Technology.
As the Global CMO, Lagnado oversaw a variety of marketing functions, ranging from brand development, menu strategy, media, and customer relationship management. The new role of SVP Global Marketing will be taken over by Colin Mitchell, with a focus on business insights and menu innovation; he will report directly to Steve Easterbrook, the CEO. Bob Rupczynski will become the SVP Marketing Technology and report to Daniel Henry, an executive VP and chief information officer (CIO).
The exclusive partnership with UberEats comes to an end
McDonald’s is adding DoorDash as a new partner for food delivery, providing an additional platform for the fast food chain to grow its food delivery business. Before that, McDonald’s had an exclusive partnership with UberEats.
UberEats now serves about 64 percent of McDonald’s U.S. stores. Since the two companies established an exclusive partnership in 2017, delivery makes up about two to three percent of McDonald’s business, at about $3 billion.
Restaurants typically pay UberEats a fee of 15 to 30 percent of the bills, but Uber would charge a lower fee to some of its large accounts/partners. The delivery fee negatively affects the franchisees’ profitability.
DoorDash is another big player in the food delivery market, leading in sales in San Francisco, Washington D.C., San Antonio, Dallas-Fort Worth, and San Diego. DoorDash’s partnership with McDonald’s launched in Houston across 200+ restaurants on July 29. Consumers in DoorDash’s subscription programs can enjoy unlimited free delivery on orders of $12 or more.
The future of marketing
According to CNBC, other companies such as Uber and Johnson & Johnson (J&J) also took a similar approach to restructure their marketing division. Uber announced in June that the company’s marketing duties would be handled by its SVP of Communications and Public Policy. J&J also eliminated its CMO by splitting its duties among other executives in the company.
Because technology has already transformed business-to-consumer communications and significantly affect consumers’ experience with a brand, today’s businesses must continue to reconsider the job of a CMO. In Uber’s case, such change can also ensure the company uses a united message to communicate with all of its stakeholders.
The future of delivery business
The growing food delivery business is too big to be ignored. Besides restaurants and food-delivery startups, major retailers are also getting into the delivery competition.
Walmart and Nordstrom, for example, are building physical stores that “surprisingly” do not sell anything. These stores, or so-called small hubs, will allow shoppers to retrieve their online orders without waiting for home delivery, responding to the “buy online, pickup in-store” trend.
The Nordstrom Local hubs are also smaller than its traditional full-service department stores, which agrees to the boutique store trend in the market. Now, Nordstrom has three Local hubs in Los Angeles and is scheduled to open two in New York City in September.
In another Business Insider report, many parking lots are now transformed into hubs for UberEats and Amazon deliveries. Such evidence further supports that Amazon’s departure from the restaurant delivery business might just be a temporary solution.
Meanwhile, UberEats just stepped into the dine-in business. UberEats’ dine-in option, now available in selected cities, such as Austin, Dallas, and San Diego, allows consumers to order the food ahead of time, then go to the restaurant, and enjoy the food inside the restaurant. Moreover, the standard Uber delivery and service fees will be waived.
The competition in the delivery business is heating up. The question is: how hot can it be? What do you think?