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McDonald's Adds a New Delivery Partner

By Daniel B. Kline - Mar 4, 2020 at 11:04AM

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McDelivery, as the company calls it, has been a growing part of its business.

McDonald's (MCD 2.40%) has seen strong results from adding delivery to its menu, and has now added a new partner to expand its reach.

The fast-food giant has partnered with Postmates to deliver from more than 300 restaurants in the Los Angeles and Dallas areas beginning this week. McDonald's works with multiple delivery partners in the United States including DoorDash and Uber Eats.

A McDonald's Big Mac

McDonald's has added a new delivery partner. Image source: McDonald's.

Why does McDelivery need more partners?

Consumers have not picked a winner in the food delivery space, and it's a fractured market. Working with multiple partners allows McDonald's to serve more customers across a broader geography.

In his remarks in the company's fourth-quarter earnings call CEO Chris Kempczinski noted that about 25,000 of the chain's restaurants, roughly two-thirds of the total, offer delivery.

"In just three years, McDelivery has gone from generating $1 billion in sales for McDonald's company and franchise restaurants to over $4 billion in sales this past year," he said.

It's all about access

McDonald's seems to understand that some customers have a favorite delivery service and that some have limited choices in the market. By partnering with multiple services, the company has a better chance of being able to serve the most customers.

In addition, adding partners gives the company a hedge against some delivery players going out of business or dropping coverage in certain areas. Expect this Postmates deal to be a test that -- assuming it works -- gets rolled out in more markets.

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