McDonald's franchisees experiment with mobile loyalty

A McDonald’s USA spokeswoman confirmed that a few franchisees of the brand are experimenting with a mobile loyalty solution, but said those isolated tests do not represent a larger adoption of a loyalty program, despite speculation from industry watchers.

Bloomberg News reported that McDonald’s owner-operators were testing Front Flip, a smartphone app that scans unique QR codes at restaurants and activates a virtual “scratch card” that reveals prizes like free food or discounts.

McDonald’s director of U.S. media relations Lisa McComb said in an email that the brand is not conducting a national test of Front Flip or any other solution at this time.

“We are not testing a loyalty program with that company, and there are no plans to roll one out nationwide,” McComb said. “One region is doing a local experiment with gaming and couponing technology.”

A Front Flip spokeswoman confirmed that 420 franchised McDonald’s units, primarily in the Midwest and East Coast, are testing the app. Front Flip would not comment on future tests with additional McDonald’s units.

McDonald’s had previously confirmed the test of a mobile-payment solution in Salt Lake City and Austin, Texas, but said it is too premature to determine whether that platform or any other mobile-marketing programs would roll out systemwide soon. But some sort of solution that could integrate mobile payments, ordering and loyalty is an area of focus for the McDonald’s brand and its franchisees, according to a memorandum summarizing a June meeting of the owner-operators’ National Leadership Council.

Following the announcement of chief marketing officer Neil Golden’s retirement, observers of McDonald’s noted that innovating the brand’s mobile marketing is a major opportunity.

Deutsche Bank securities analyst Jason West wrote in a research note following a meeting with McDonald’s Corp. management that a “more robust digital platform” could launch systemwide in the next 12 months.

“We would expect it to start with mobile payment, before moving to mobile ordering and eventually loyalty,” he wrote. “Given McDonald’s significant scale, resources and technology investments, we believe the company can quickly move from laggard to leader in the mobile engagement arena, perhaps providing a competitive advantage against quick-service peers that do not have the resources or infrastructure to move as quickly.”

Oak Brook, Ill.-based McDonald’s operates or franchises more than 34,000 restaurants worldwide, including more than 14,000 locations in the United States.

This article has been revised to reflect the following correction:

Correction: October 3, 2013 Due to a writing error, a previous version of this story mischaracterized the possibility of further tests of the Front Flip platform at franchised McDonald’s locations. While Front Flip said a figure of 150 more locations adopting the platform, which was first cited in the Bloomberg News report, was inaccurate, the company did not comment on how many additional stores might soon test Front Flip.

Contact Mark Brandau at [email protected].
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