According to The Associated Press, McDonald's wants everyone to know about the Arch Card and has waited until now to exploit the public's gift-giving mood during the holiday season. McDonald's intends to distribute $22 million in free cards. Some will be given to Southwest Airlines patrons, while other Arch Cards, preloaded with $1, will be bundled with McDonald's popular chicken items.
When financial historians eventually review the greatest innovations in retail during the last century, the advent of the gift card will surely rank among the upper echelon. Sound like goofy hyperbole? It isn't. Fast-food joints such as Wendy's
It's hardly news that gift cards get more popular every year. One thing I like about McDonald's Arch Card marketing campaign is its intent to emphasize the cards' convenience once the company has finished playing up the holidays. I presume that will include highlighting the ability to allocate funds on the card for frequent McDonald's visits. The company has a lot of loyal patrons (I eat there a lot), and it only makes sense to try convincing them to earmark some of their discretionary monies for the card.
One mistake I see with this initiative is the forced denominations ($5, $10, $25, or $50) customers must choose from. I think consumers would much rather choose the amounts they want to store. Another concern: With McDonald's under fire for its fat-laden menu, will these cards be seen as tools to make eating unhealthy fare even easier?
McDonald's won't need to worry about its critics, though. It would love to replicate the success of the Starbucks
According to McDonald's website, its global same-store sales increased 3.4% in October. That's the 30th straight month of comps increases, but it should be noted that comps growth for October 2004 was much higher, coming in at 6.1%.
Can the Arch Card help Mickey D's regain such sales levels? Not on its own, of course, but if franchisees can perform more efficient transactions by selling a Starbucks-load of Arch Cards, this little holiday bundle might indeed be a harbinger of shareholder joy.
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