McDonald’s Negotiates End Of Uber Eats Exclusivity Deal

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McDonald’s is looking to make more money for its franchisees by renegotiating the terms of its exclusive delivery deal with Uber Eats, Bloomberg reported.

The two companies recently met to lower the fees paid to the delivery giant. The terms will include “significantly reduced commission rates for all U.S. restaurants,” with the eventual ending of the deal that currently only allows for Uber Eats deliveries, with no other companies involved. The move would allow for other companies like DoorDash or Grubhub to potentially deliver for the fast food company.

The news came in the form of a memo reviewed by Bloomberg, which arrives as Uber prepares its IPO, expected next month. Uber is touting its McDonald’s partnership as a prominent part of its business.

McDonald’s Chief Executive Officer Steve Easterbrook spent $300 million to update some of the restaurant’s key aspects, including adding self-order kiosks and redesigning digital menus. Shares of the 71-year-old company have almost doubled since Easterbrook took the helm.

The exclusivity deal with Uber started in 2017 in hopes of reigniting sales. The company declined to discuss the terms of the deal when Bloomberg asked, but said, “We’re committed to partnering with our franchisees to give them the support they need to continue to grow an experience and business priority that’s important to our customers and our brand.”

Every order with McDonald’s through Uber Eats has various costs. The fast food company charges $1.99 on top of a food order, with some fees and small order charges as well. The franchisees also pay a percentage to Uber, which has been a matter of contention for them. Franchisees own about 93 percent of all of the restaurant’s locations.

Food delivery is a growth spot for Uber, and one the company will promote during its road show with investors in the coming weeks. The company’s IPO filing has two pages devoted to its partnership with McDonald’s, and says Uber Eats makes up almost 10 percent of food sales at the fast food restaurant.

The memo also said that moving forward, Uber Eats will help with a “sizable contribution” to go toward national advertising for McDonald’s.

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https://www.pymnts.com/news/delivery/2019/mcdonalds-uber-eats-deal-negotiations/