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McDonald’s Franchisees: How to Benefit from Uber Eats

Posted by Ryan Moore on Tue, Mar 5, 2019

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uber eats mcdonald's franchiseeIt is an undeniable fact – the world is changing and at breakneck speed. In almost every corner of society, technology and cultural tastes are reshaping they way things are done, produced, consumed – you name it. Businesses will need to continually adapt and remake themselves in order to remain relevant, let alone profitable.

The quick service restaurant industry –  and the entire restaurant industry at large –  is undergoing these changes in lockstep with the rest of society. One such change was ushered in on a large scale for McDonald’s franchisees and others with the advent of Uber Eats (and other lesser known home delivery services).

Now consumers can enjoy many of their favorite restaurant offerings in the comforts of their own home without having to even leave. Home delivery has been around for a long time as some restaurants run it themselves, but with Uber Eats, home delivery is now available from almost any restaurant.  

financial viabilityAs is often the case with any type of change, the evolution from one to the next is gradual, imperceptible to some but affecting all. Take the credit card revolution for example; people paying with little plastic cards instead of cash and coin or a paper check(!) was a slow transition.

Old habits die hard. However, I no longer ever have cash in my wallet and now pay a little bit extra* for everything I consume for the privilege of paying later (*Credit card companies charge vendors, vendors pass those charges on to consumers, everything costs a little bit more). J. Wellington Wimpy would be proud.

READ MORE: Your McDonald’s Franchise Investment/Re-Investment – Will It Really Pay Off?

In light of everything just mentioned, there are a few steps that McDonald’s Owner/Operators should take to ensure these changes augment and not abridge the financial future of their business.

Review: In the words of former President Ronald Reagan, “Trust, but verify.” You cannot simply assume that the reports received from third parties are complete and accurate all of time. The vast majority of the time they will be, but mistakes can happen, mistakes have happened, and it’s important they are caught early. Remember, an avalanche starts as a snowflake.

Reconcile: Sales transactions that appear to take place outside of the restaurant walls are sales transactions nonetheless and should be given the same critical eye as in store sales (and deposits). Monthly sales should be reconciled with reports received from the third party delivery service (UberEats, etc.) and the associated fees should be broken out and tracked.

Just as in-restaurant cashless transactions have been increasing over time in comparison to cash, delivery sales will continue to increase, so tracking the associated transactional costs will be key. Profit maximizing can only occur when all relevant information is known.

READ MORE: Buying a New Restaurant? Borrow Techniques from a Turnaround CFO

Reward: While it may be difficult for McDonald’s franchisees to incentivize consumers to change their habits in favor of more delivery, the potential benefits are clear. Average checks for home delivery sales are typically higher than at the restaurant, menu items are not typically available for discount, and labor costs are lower. Get creative on social media and in the local press with promoting home delivery. Loyalty programs are sticky and self-reinforcing ways to increase sales.

The bottom line: At least for the foreseeable future, people need to eat. You want them to choose McDonald’s when deciding what to eat.

Home delivery increases the reach of the brand and your business and will enable McDonald’s Owner/Operators to serve more burgers and fries. It’s not a sales segment that can/should be ignored and if done right, home delivery can help elevate your business and profitability to the next level.

Concannon Miller has been providing accounting, tax and consulting services to McDonald's franchisees for 50 years. Read more about our services here or contact us for personalized assistance.

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Topics: McDonald's management

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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