McDonald’s Tests Third-Party Ads on Screens Across 13,700 US Stores
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McDonald’s is testing third-party ads on digital menu boards and ordering kiosks in select company-owned US restaurants. The trial targets the gap between payment and collection across a domestic footprint of more than 13,700 outlets.
Drive-thru boards and self-service kiosks display commercial promos once a customer completes an order. Reserving that post-purchase window for outside brands lets the chain build a high-margin ad business without slowing down the ordering queue.
Sales growth has decelerated sharply. Second-quarter global comparable sales rose 1.3 per cent for the period ended June 30. Domestic comparable sales slowed to 0.8 per cent, down from 3.9 per cent in the first quarter.
Turning Customer Wait Times into Ad Inventory
The system relies on idle visual time. After an order is logged and paid for, the display switches from item selection to third-party commercials while the kitchen prepares the meal.
McDonald’s reaches roughly 26 million daily customers in the US. It interacts with nearly 90 per cent of the country’s population each year. That physical footfall provides an audience density rival digital networks struggle to match at the point of sale.
A company spokesperson confirmed the test in an email statement:
“This limited menu board advertising pilot at select company-owned restaurants is exploring ways to share post-purchase content that customers may find helpful, relevant, or interesting, while ensuring the McDonald’s experience remains at the center of every visit.”
The Push into In-Store Retail Media
Supermarket operators have spent years converting aisle footfall into retail media revenue. Media margins now generate between 3 per cent and 10 per cent of total operating profit for grocers, according to McKinsey & Co.
“Domestic comparable sales slowed to 0.8 per cent, down from 3.9 per cent in the first quarter.”
Fast-food chains have lagged behind supermarkets in building dedicated advertising arms. A study by Forrester Consulting found restaurant operators have been slow to commercialise transaction data and screen interactions, leaving physical point-of-sale displays underutilised.
In-store hardware is already deployed. Digital board rollouts began roughly a decade ago. By 2019, dynamic screens sat in more than 11,000 drive-thru lanes alongside self-ordering kiosks inside dining rooms.
Implications for Asian Master Franchisees
Asian master franchisees and licensed operators could use the pilot as a blueprint to extract auxiliary revenue from capital-intensive store refits. High-density markets such as Japan, South Korea, Taiwan and the Philippines already run heavily digitised ordering environments with dense foot traffic.
Monetising screen real estate introduces friction with store operations. Franchisees run the vast majority of outlets globally. Operators will demand a clear split of ad revenues if corporate headquarters mandates third-party messaging on store hardware.
Clutter presents another hurdle. Displaying non-food advertisements in dining areas risks degrading store environments. Promoting outside consumer goods at drive-thrus can also distract drivers during meal rushes, forcing operators to balance ad income against speed-of-service metrics.
Traffic Squeeze and Hardware Modernisation
Mounting margin pressure from rising input costs and softening store traffic drove the ad pilot. McDonald’s responded earlier this year by introducing value-oriented meal bundles to counter customer resistance to menu price increases.
Modernising the digital footprint formed the first phase of this strategy. Over the past decade, capital poured into indoor touchscreens, drive-thru automation and mobile loyalty programmes to lower labour requirements and capture first-party consumer data.
An investor day, the company’s first in three years, is scheduled for September 23. Management is expected to outline whether third-party screen advertising will expand across franchised locations or remain confined to company-operated pilot stores.
Questions & Answers
Q.What is McDonald's hoping to achieve by testing third-party ads on their screens?
What is McDonald's hoping to achieve by testing third-party ads on their screens?
The company aims to build a high-margin ad business by utilising the post-purchase window. This move comes as sales growth has decelerated sharply, and they seek to generate auxiliary revenue.
Q.Why is McDonald's exploring this new advertising model now?
Why is McDonald's exploring this new advertising model now?
The push is driven by mounting margin pressure from rising input costs and softening store traffic. Sales growth has also slowed considerably in recent quarters.
Q.What potential challenges could McDonald's face if this advertising model expands beyond company-owned stores?
What potential challenges could McDonald's face if this advertising model expands beyond company-owned stores?
Franchisees will likely demand a clear split of ad revenues, and there's a risk of degrading store environments or distracting drivers with too much clutter from non-food advertisements.
Q.How does McDonald's new ad test relate to the broader retail industry trend?
How does McDonald's new ad test relate to the broader retail industry trend?
Supermarket operators have successfully converted footfall into retail media revenue for years. Fast-food chains like McDonald's have lagged behind in building dedicated advertising arms.
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