Who doesn’t like the idea of ordering Egg McMuffins and chicken nuggets with a few taps on their phone? Not only do consumers like the sound of that, but it also seemed to appeal greatly to analysts and investors.
Shares of fast food restaurant chain McDonald’s Corp. MCD have reached an all-time high of $132.67, up 0.33%, in midday trading Wednesday. The surge came from the back-to-back upgrades from Wells Fargo & Company WFC and Bernstein.
Earlier this week, both firms upgraded the fast food restaurant’s stock to “outperform” from “market perform” on the company’s decision of launching full mobile ordering at every U.S. location. (To read more about McDonald’s mobile ordering and what analysts said, check out this Zacks article: McDonald’s to Serve Up Mobile Ordering Ahead of Its Fast-Food Competition)
"More menu innovation and, over time, the experience of the future [mobile and kiosk digital ordering] will prove beneficial, as it has in other markets," Bernstein analyst Sara Senatore wrote.
McDonald’s has been experiencing steady growth since the beginning of 2017. The value of the company’s stock has grown over 9% year-to-date. Through a series of successful modifications to its menu, such as switching to fresh beef for its Quarter Pounder burgers in some stores and offering multiple sizes of its signature Big Macs, McDonald’s has tried to appeal to the more health-conscious customer.
The Invisible Line of Mobile Ordering
While the reason for McDonald’s digital approach is evident, it can be a double-edged sword as the Seattle-based coffee chain, Starbucks SBUX, has experienced.
Mobile ordering may lead consumers to believe they are skipping the long line of waiting; however, in reality, mobile ordering may have a longer wait time.
Both physical and online orders fall to the same in-store employees to ensure food and drinks make it to customers. During prime times, stores are already filled with physical orders. Mobile orders don't automatically become the priority. Instead of skipping the line in stores, mobile consumers find themselves in another invisible line.
While Starbucks has rolled out new changes and training to fix the issue, McDonald's would have to put in a greater effort to avoid creating the invisible line. Mobile ordering becomes one more task that employees would have to juggle among in-store orders, drive-thru, and food handling processes on the fresh beef of the Quarter Pounders.
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