Is MyMcDonald’s Really a Rewards Program?

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Not long ago I wondered if a loyalty program could solve for a troubled business model (https://www.linkedin.com/pulse/can-loyalty-program-solve-troubled-business-model-john-c-keenan-klmke/).

“…my take is that a loyalty program can’t solve for a flawed business model, nor can it overcome short-term economic headwinds.”

I could have narrowed it like this: a rewards program can’t solve for other problems facing the business.

Now comes news that McDonald’s has reported less than satisfactory Q4 2024 results (https://www.customerexperiencedive.com/news/mcdonalds-loyalty-recapture-traffic-accelerating-the-arches/739725). The headline: “McDonald’s looks to loyalty to recapture traffic after disappointing quarter” and the sub-head “Strong sales from the McDonald’s rewards program couldn’t offset the negative impact of an E. coli outbreak.” Hmm, those are some headwinds. I think whoever wrote the sub-head is confusing loyalty and rewards, a common problem. One could argue that MyMcDonald’s Rewards is not really a rewards program.

What were the exact results? “McDonald’s U.S. comparable sales fell 1.4% in the fourth quarter, according to an earnings release.” That begs the question: can McDonald’s really ride loyalty to the rescue? Some additional context may help.

• “The MyMcDonald’s Rewards loyalty program reached more than 170 million active users in a 90-day period during the quarter, according to President and CEO Chris Kempczinski. Sales attributable to loyalty members were up 30% year over year in 2024.”
• “Loyalty members accounted for $30 billion of the company’s $130 billion in global sales, according to the earnings release.”
• “The company aims to reach 250 million 90-day active users and $45 billion in annual systemwide loyalty sales by the end of 2027, according to Kempczinski.”

That is impressive scale. Loyalty members accounted for almost 24% of global sales in 2024, and again, one could argue that it is primarily driven by the digital experience and the convenience of mobile ordering, not their involvement in “rewards” or earn-and-burn points redemption. That aspect of the loyalty program is never mentioned in the earnings call transcript or any articles I could find.

This piece from September 2024 provides some additional data points (https://visiblealpha.com/blog/mcdonalds-value-strategy-to-boost-growth-by-2025/), suggesting that McDonald’s is expected to grow revenue by just over 5% each of the next few years. That means 3-yr growth of 16.1%, compared to the targeted 50% growth in share of revenue represented by loyalty members. That is a dramatic shift in revenue away from non-loyalty members, and more than likely will occur because non-members will be forced into joining the loyalty program to take advantage of mobile ordering, not because incremental revenue from existing members is outpacing organic growth.

I’m going to pat myself on the back here and say that this is where I had predicted things would move, way back in 2023:

“How do I think the role of rewards programs in restaurants will evolve in the future? …(for) chains like McDonald’s, Subway, Domino’s etc. that have a broad footprint, high visit frequency, and category leadership, and may even have developed a consumer habit, like Starbucks. Expect these to continue to step down the value of rewards and even phase them out over time. Shifting from spend-based to visit-based rewards may be a first move. Members may grumble but will quickly fall back into their visit routines. Apps will be used as a platform that delivers increasingly tailored offers and promotions based on individual purchase history… Rewards programs are only one mechanism to try to encourage brand preference/selection, and they only have utility when they provide value greater than that which can be delivered through other means, like tailored offers and promotions delivered directly to consumers through the mobile app. (emphasis added)”

This is where McD’s seems to be going – it lines up pretty closely with this recent observation from the CEO’s earnings call comments:

“Loyalty customers spend more than customers outside the loyalty system, according to Kempczinski. The restaurant chain is aiming to build on their spending habits by adding more offers and features to its digital suite.”

Again, no mention of rewards. Because MyMcDonald’s Rewards isn’t really a rewards program, it is a membership form of loyalty wrapped up in a mobile app.

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