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McDonald's to Serve Up Mobile Ordering Ahead of Its Fast-Food Competition

Benjamin Rains

McDonald's Corporation MCD is set to offer mobile ordering and payment options at all of its 14,000 US locations by the end of the fourth quarter, according to a Wells Fargo & Company WFC analyst note on Monday.

In a note to clients, Wells Fargo analyst Jeff Farmer reported that McDonald's would be the first major US fast-food chain to offer completely mobile ordering at every US location.

“Restaurant consumers are aggressively gravitating toward concepts that offer the greatest level of convenience and control across ordering, payment and distribution,” Farmer said. “Among the hamburger players, we believe that MCD is establishing a first-mover advantage with digital that can drive sustainable share gains in late 2017 and beyond.”

McDonald's stock was up marginally on Monday and is a Zacks Rank #3 (Hold). Despite all the talk of healthy eating and more options, McDonald's stock is currently trading near its all-time high at $131.35 per share.

On top of rolling out mobile smartphone ordering and payment options at all 14,000 McDonald's locations in the US, Farmer noted that the fast food giant is set to add digital ordering kiosks in 2,500 US stores by the end of the fourth quarter. Wells Fargo boosted McDonald's valuation range to $145 to $150 from $125 to $130.

“Among the hamburger players, we believe Wendy’s is closest to this timeline with mobile order & pay expected to be offered across half of its system by the end of 2017,” the note said. “Burger King & Jack in the Box are in test.”

According to Business Insider, mobile ordering is expected to become a $38 billion industry by 2020, accounting for 10% of total fast-food sales. By moving to mobile ordering now, McDonald’s is ahead of its competition, which could prove valuable in the short-term.

McDonald's officially announced its mobile order and pay plan on March 1, noting it would add the optional method at a total of 20,000 locations by the end of 2017. Mobile ordering will allow customers to choose curbside delivery instead of going through the drive-thru line. Customers who choose to go through the drive-thru with their mobile order will simply read their mobile code and pick up their order at the window.

Other Potentially Positive McDonald's Moves

McDonald’s recently announced it would begin to make the switch to fresh, never-frozen beef for its “Quarter Pounder” burgers by mid-2018 at most locations. The move comes after many consumers increasingly want more fresh options, even when it comes to their burgers.

"Over the past two years, we've made a series of bold, tangible changes for our customers," McDonald's President and CEO Steve Easterbrook said in a press release. "Serving All-Day Breakfast, moving to cage-free eggs and testing delivery are all proof of our commitment to building a better McDonald's. And we are committed to transforming more aspects of our business, including offering a more modern and enjoyable dining experience, adding new levels of convenience and technology, and making more positive changes to the food we serve."

On top of adding mobile ordering and improving some of its menu options, the Illinois-based company is set to officially move from its corporate headquarters in Oak Brook into its new 500,000 square foot downtown Chicago offices starting in 2018.

McDonald's move into the city is part of a larger corporate exodus from the suburbs that hopes to help attract a greater amount of young, exceptional talent.

The company is set to host its first quarter 2017 earnings call on April 25.

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