It’s all about digital as the fast-food chains expand their reward programs into new territories
Scary clowns, hidden Big Macs, cheeky billboards—Burger King and McDonald’s aren’t averse to some friendly rivalry. However, at the end of July things got a bit more serious as both brands launched their loyalty apps in the U.K.
The Your Burger King app has now been rolled out to around half (297) of the fast-food chain’s franchises in the market allowing customers to earn 10 points for every $1 (1 pound) spent, which can then be redeemed for food and drink.
McDonald’s, meanwhile, got emotional with an ad from Leo Burnett promoting MyMcDonald’s Rewards, telling the story of a trucker saving up his points to collect a McChicken sandwich for his beloved wife.
The Big Mac owner’s loyalty program sees every penny spent in one of McDonald’s 1,300 U.K. restaurants equate to a single point, which can be spent on food or donated to different non-profits including the Ronald McDonald House Charities.
The programs have more in common besides free burgers and fries, though: they offer an insight into how the two longstanding rivals are doubling down on digital to reach consumers directly and drive growth.
Driving digital adoption
Covid-19 helped fast-food chains find their digital footing as locked-down consumers turned to owned and first-party apps to order takeout.
As online delivery became a lifeline for the ailing restaurant industry, global installs of food delivery apps increased 25% in 2020 compared to 2019, and then by a further 21% in 2021. Then, when lockdown restrictions eased globally, McDonald’s and Burger King ordered radical rethinks of their entire customer experience in store and in the drive-thru lane to improve the full digital customer experience.
Back in January, McDonald’s chief executive Chris Kempcziski, credited MyMcdonald’s as the “single biggest driver of digital adoption” for the brand, claiming it was on its way to becoming the “world’s largest” loyalty program.
Six months on, during the brand’s half year earnings update in late July, he revealed the Golden Arches had loyalty programs in 50 different markets. In its largest, the U.S., 22 million members were active in the three months to June.
“It has consistently driven more frequent visits and incremental sales in each of the markets as we’ve launched,” he said.
More broadly, he noted investments McDonald’s was making in digital were beginning to bear fruit. In the brand’s top six markets (which include the U.S., China and Japan) sales from its existing mobile app, kiosk and delivery amounted to over $6 billion in the most recent quarter—one-third of the total.
Kempcziski said he was excited about the potential for digital channels “to be much more targeted in how and where [McDonald’s] delivers value” to customers.
Victoria Herrick, strategy partner at consultancy Strat House, said McDonald’s existing digital offerings were already a vehicle for data collection, suggesting this move was intended to accelerate and build the number of customers already using its app.
“Loyalty can be used as another incentive for customers to switch from in-store digital or at the counter ordering, to pre ordering via digital—with obvious operational benefits,” she added.
“Of course, for customers, it’s a slick way for them to gain rewards—a 21st century replacement for collecting stickers and tokens—and a more sustainable one, too.”
In the U.K., cash-strapped consumers will have extra incentive to join these type of loyalty programs as a recession looms large. This was reflected in a recent poll from the Institute of Practitioners in Advertising (IPA) which questioned 2,000 people and found 33% wanted brands to offer more value on promotions and 30% wanted them to reward loyalty.
Burger King’s U.S. loyalty initiative Royal Perks already offers consumers free upsizing, birthday bonuses and exclusive rewards.
In May, parent group Restaurant Brands International (RBI) said Burger King, Popeye’s and Firehouse Subs generated 9%, 18% and 30% of sales through digital channels respectively.
“We attribute this improvement to a combination of factors, including growth and delivery, an increase in mobile order and pay continued traction from loyalty and well-executed digital campaigns,” said chief operating officer Joshua Kobza.
Both fast-food chain’s CRM investments come against the backdrop of controversial plans to introduce an advertising ban on foods that contain high fat, sugar and salt (HFSS). The legislation would place a blanket ban on untargeted digital ads promoting unhealthy food, and on broadcast TV before 9pm.
Loyalty apps would be exempt from this though, offering another media for McDonald’s and Burger King to reach engaged audiences, with brands still able to advertise on their owned platforms.
The secret sauce
For marketing consultant Professor Dr. Jonathan A.J. Wilson of Regent’s University, the potential for McDonald’s and Burger King to glean real-time data, tied to location, diet, habits and richer data linked to psychographics, are “mutually beneficial.” “That’s what customers can be rewarded for to hook them in,” he said.
“Food apps and the pandemic have accelerated behavior changes and now top brands have an opportunity to take over,” Wilson mused. He pointed to the most recent Kantar BrandZ rankings in which McDonald’s leapt three places to reach number six for 2022, upping its brand value to $196.5 billion, plus 27% year-over-year.
“McDonald’s has to have a loyalty app, it shouldn’t even be a matter for debate, and Burger King as a challenger brand has to have one too.”
Wilson is watching closely to see if either brand trials anything “fresh and innovative that breathes extra personality and community into their brand,” in the same way as the brands like Adidas and Nike have with their propriety apps.
“Linking purchase to experiences and the right habits like watching a movie, cramming for an exam or after jumping off a plane in a foreign country will be the secret sauce.”
Indeed, McDonald’s has already been linking experiences to loyalty, most recently with the launch of Camp McDonald’s—a “reimagined” digital version of organized summer fun aimed at Gen Z customers. It features food deals, merch offers from designers like streetwear brand Ma®ket and concert performances by artists such as Kid Cudi.
Hosted within the McDonald’s mobile app, the campaign is billed as 27 days of daily programs designed to generate loyalty among customers 18 years old and up.
