• McDonald's on Wednesday said it is expanding its partnership with DoorDash across the country. 
  • The fast-food giant's "McDelivery" will be now be available in more than 10,000 U.S. locations through its partnerships with DoorDash and Uber Eats. 
  • Fast-food retailers are betting on food delivery apps to generate more revenue from new customers and markets. 

McDonald's said Wednesday that it is expanding its "McDelivery" service across the country through a partnership with DoorDash. Customers will be able to order home delivery from 10,000 McDonald's locations, including restaurants in small- and mid-sized cities.

 

The Chicago-based fast-food giant first launched a food delivery service with Uber Eats in 2017. Last month, it piloted a delivery service with DoorDash in Houston, Texas. The latest deal with DoorDash will expand McDelivery from 9,000 restaurants to more than 10,000 locations via the two partners.

"We will quickly scale with DoorDash across the U.S. to provide customers with a choice of delivery partners," McDonald's CEO Stephen Easterbrook said in a July earnings call discussing the partnership.

McDonald's is not the only fast-food chain fulfilling online orders through third-party food delivery services. Customers can already order Kentucky Fried Chicken, Panera, Taco Bell and Wendy's through DoorDash or its competitor GrubHub. Starbucks lovers in a limited number of U.S. cities can also get deliveries of coffee and frappuccinos from Uber Eats.

McDonald's deal with DoorDash partnership illustrates how Americans are changing their dining preferences. Millennials, for one, prefer to cook at home or order in, which can save money compared with eating at a restaurant. Offering home delivery may help McDonald's target those younger consumers who want quarter pounders delivered to their doorstep.

Betting on food delivery

Third-party food delivery services like DoorDash can help restaurants reach new customers, generating more revenue. DoorDash, which said it reaches about 80% of Americans, is free to sign up for and use, but charges its DashPass subscribers $9.99 a month for free delivery on orders of $12 or more.

McDonald's also estimates that food delivery will be a $4 billion business in 2019 for the chain and its franchise businesses. McDonald's CEO Easterbrook said in a recent earnings call that McDonald's is seeing about twice the average check on a typical delivery order.

But companies like DoorDash and GrubHub have also come under fire from food retailers by charging extra transaction fees that can squeeze razor-thin profit margins. McDonald's, reportedly wary of those fees, negotiated lower commissions with Uber Eats when it signed on with the service, according to the Wall Street Journal.

Asked about the fees for delivery apps, McDonald's CEO Easterbrook told analysts in July he's working with franchise owners to explore how best to "take some of the heat out of the commission costs that they face in order to make it encouraging."

Third-party companies also come with other problems, like mishandled orders, that can come back to haunt the restaurant, but not the delivery service. One recent report found that more than one-quarter of food delivery company workers have admitted to helping themselves to customers' meals en route.