McDonald's Ties Up With Grubhub To Augment Delivery Services

McDonald's Corporation (NYSE:MCD) has partnered with Grubhub for the rollout of McDelivery to nearly 500 restaurants in the NYC and Tri-State Area. Following the launch, McDonald's lovers in the NYC and Tri-State Area can order via Grubhub and the company's New York brand, Seamless, later this month.

This partnership deal will also include a direct point-of-sale (POS) integration. McDelivery, which was launched in 2017 in the United States, is likely to be a $4 billion business for both McDonald's and its franchise restaurants worldwide during 2019.

With the growing clout of Internet, digital innovation has become the need of the hour. McDonald's is partnering with delivery channels and digital platforms to drive incremental sales. Recently, the company also expanded the McDelivery service with DoorDash.

We believe the aforementioned efforts will help the company to drive sales. Moreover, the company is undertaking digital initiatives to better serve customers, with nearly all of its U.S. restaurants now using digital menu boards. Additionally, McDonald’s continues to roll out mobile order and pay, with a new curbside check-in option. Already, it has launched the option in nearly all 20,000 U.S. restaurants.

Furthermore, this Zacks Rank #3 (Hold) company is increasingly focusing on delivery to provide augmented convenience to customers. The company provides the delivery service from more than 20,000 restaurants in above 75 countries via Uber (NYSE:UBER) Eats in the United States, SkipTheDishes in Canada as well as Uber Eats, Glovo and Deliveroo in Italy.

Bottom Line

With Internet, digitalization and electronics influencing every facet of our day-to-day lives, it is obvious that the restaurant industry has embraced this online trend.

Per the NPD Group, foodservice delivery services have contributed significantly to restaurant sales over the past few years. Over the last four years, digital orders increased by 23%. As a result, digital sales are no longer a luxurious feature but are the dire need of the hour.

Moreover, Morgan Stanley (NYSE:MS) predicts that the food delivery industry might account for 11% of all restaurant sales by 2020.

Key Picks

Better-ranked stocks worth considering in the same space include Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) , The Wendy's Company (NASDAQ:WEN) and Shake Shack Inc. (NYSE:SHAK) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dave & Buster's Entertainment, Wendy's and Shake Shack have an impressive long-term earnings growth rate of 14.8%, 14.3% and 22.5%, respectively.

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