Will Delivery Sales Constitute A New Source Of Revenue For McDonald’s By 2021?

January 17th, 2019 by Trefis Team
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McDonald's

McDonald’s (NYSE:MCD) reported a strong quarter Q3 beating consensus expectations, with revenues at $5.37 billion and earnings at $2.10 per share. Global comparable sales increased by 4.2%. The company’s long-term goal is for 95% of McDonald’s restaurants to be owned by franchisees and this is expected to be completed by the year 2021. This strategy has helped the company cut costs and thus improve margins, and consequently, their earnings. The company is expected to continue its strong performance for the 4th Quarter and finish the year strongly.

Delivery is touted to have a huge potential in increasing revenue in the medium and long term for McDonald’s. As of now the company has approximately 11,500 (out of 37,800+) restaurants which are capable of Delivery. This number stands at about 30% of Total restaurants. The Delivery sales revenue from these restaurants is 10% of its Total revenue. Thus, Delivery Sales revenue to Total Revenue is a mere 3%.

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We have created an interactive Dashboard, What Are Sources Of Revenue For McDonald’s Over The Next 3 Years? Is Delivery A New Source Of Revenue? where we estimate the overall revenue for McDonald’s and how much of the same can be contributed by Delivery Sales. You can modify our assumptions to see the impact any changes would have on the Total Revenue, segment-wise revenue and Delivery Revenue.

 

We estimate Delivery Sales to reach about 8.6% of Total Revenue as of 2021. This is on the back of the assumption that Delivery will be available in about 50% of the Total stores and it will contribute nearly 17% of the Revenue from that store. Thus, according to our estimates, Delivery Sales would be contributing approximately 9% of overall revenue by 2021.

 

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