McDonald's Renegotiates Delivery Agreements with DoorDash and Uber Eats to Boost Profits

While the pandemic has been tough on restaurants in general, fast food chains have not only managed to stay open, but have branched out into new areas of business like delivery. Many restaurants take advantage of services like DoorDash and Uber Eats to get their food delivered to their customers' door steps, and McDonald's is no exception. But while most businesses shell out up to 15 percent for the privilege of having their food delivered, McDonald's has found a way to reduce that cost.

Last month, the fast food giant negotiated new agreements with both DoorDash and Uber Eats, enabling its franchise operators to generate more profit and cash flow. While terms of the new deals were not disclosed, they will allow McDonald's to integrate delivery into its mobile app through the providers' white label services. The move signifies how important third-party delivery has become for McDonald's, particularly as the pandemic rages on and some people are reluctant to dine indoors (or leave their houses at all).

“What we’re trying to do with these conversations is leverage the fact that we are the largest restaurant company in the world, that we have an ability to drive traffic onto their apps that we think is second to none,” said Chris Kempczinski, CEO of McDonald's. “And that should be reflected in the rates that we’re paying.”

McDonald's has offered delivery since 2017, when it made an exclusive deal with Uber Eats covering 3,000 restaurants, mostly in Europe and Asia. Since then, McDonald's made deals with a number of third-party delivery services, with 32,000 of the company's 39,000 restaurants offering delivery. The result has been a boost in digital sales to $13 billion, comprising 20 percent of McDonald's total business.

The Uber's white label Uber Direct services are being offered through McDonald's app, enabling delivery in six continents. The DoorDash Drive service is also accessible through the McDonald's app, covering delivery services for more than 13,000 restaurants in the U.S., Canada and Australia.