I really enjoy gift cards. Not only are they a good device for, well, the obvious -- gifts -- but also I do like their use as a budgeting tool. Store some value on a nonrefundable piece of plastic, and voila -- you've got yourself a nice little monetary reserve that forces a spending discipline.
This leads to a confession on my part: I am a McDonald's (NYSE:MCD) junkie. I don't go overboard on the stuff or anything like that, but I do relish every opportunity I get to ingest a fish sandwich or a quarter-pounder with cheese (how anyone can have a quarter-pounder sans cheese is beyond me). I actually will use McDonald's gift certificates to budget for the expense; I buy a bunch, an amount that will usually last me for several months.
So, the other day I was at the drive-through (incidentally, let's hope they never use off-site order services), picking up the calorie-dense quick-grub, and paying for it with my certificate currency. Before I handed the tender to the attendant, I marveled at all the imagery on the slips -- pristine representations of Ronald's meals, photographed to inspire Pavlov-like reactions upon sight. After I gave them away, a thought that would occasionally enter my head from time to time returned yet again, only this time a bit more strongly: McDonald's really needs to get its gift card program going.
When I returned home, I visited the corporate website (I ate the food first, of course) to see whether the powers that be were currently still testing gift cards; they were.
I am so impatient for these cards because I think they represent the ultimate in convenience. I hate having to deal with change, which is what you have to do with the certificate system: The bill comes to $5.76, you hand over six slips, and you've got those two dimes and four pennies to contend with. Not cool.
McDonald's doesn't think it's so cool, either. If I had a gift card, chasing change would never occur again -- it would simply remain in Ronald's till. That crazy clown would rather have it that way; with a bunch of paper certificates, there's always a high probability that some of the captured money will slip through his gloved hands. With a plastic rectangle, that just doesn't occur; it's basic Gift Card 101, it's the essence of the concept, and it's why places like Starbucks get a kick out of it.
Let's face it: Gift cards are everywhere, they're popular, and they make good business sense. Fast-food chains such as Wendy's (NYSE:WEN) and Burger King will obviously see more efficient transaction times as a result. I'm hoping that whatever "test" McDonald's is making in regards to this program is a mere formality meant to optimize the eventual execution; as far as feasibility and market acceptability go, gift cards have already been tested (just take a trip to your local mall).
The one problem McDonald's may have is the iconic value that its gift certificates represent to many people. I have to say that, to one degree or another, even I might become nostalgic from time to time for those slips of paper with the pretty food on them. I'd guess that there are probably a lot of people out there who consider the act of giving a grandchild a booklet of McDonald's gift certificates a piece of Americana; for those who rue the day of the certificate's demise, you have my utmost sympathy. Yet, honestly, I do look forward to a stored-value card with Ronnie's face on it. I'll no longer consider him the Clown of Calories when that happens -- instead, he will be the Clown of Convenience.
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Do you think the gift card strategy is right for Mickey D's? Post your thoughts at the McDonald's discussion board.
Fool contributor Steven Mallas owns none of the companies mentioned.
