McDonald's serves up fast charge
By Jennifer Waters, CBS.MarketWatch.com
CHICAGO (CBS.MW) -- McDonald's says it's about to make fast food even faster.
In a move that could shore up its shaky sales, the world's largest burger chain announced plans Tuesday to install fast-swiping systems for credit and debit cards beginning next year in most of its 13,000 U.S. outlets.
McDonald's (MCD: news, chart) says its systems will allow customers to pay for their burgers and fries within five seconds. That's key to fast-food restaurants like McDonald's, which strives to take orders and hand them over to customers inside of 90 seconds.
"It will be comparable to what people experience at the gas pumps," spokesman Bill Whitman said. In fact, McDonald's has been testing a swiping system similar to Mobil's SpeedPass in about 400 Chicago locations. In southern California, the company has been testing transponders, which hold a prepaid cash balance and credit information that instantly deduct the food costs.
Investors gave the plan a lukewarm response, bidding the stock down 1 cent to $18.22 on volume of 4.1 million shares.
The ability to provide the technology has been in place since McDonald's first rolled out the technologically advanced Made For You kitchen systems. That so-called point-of-sale technology can be easily geared toward immediate credit-card in an integrated system, Whitman said.
"This cashless alternative gives us the ability to serve our customers as fast or faster than if they were paying in cash," he said. "It also lets them use their credit cards and get the benefits of some of the cards, like frequent-flyer miles or other special deals.
"It gives our customers yet another reason to go to McDonald's," he added.
Probably not for long. Analysts expect other fast-food restaurants to make similar efforts to roll out instant-payment options -- a move the industry has been slow to embrace. Salomon Smith Barney analyst Mark Kalinowski looks for Burger King (DEO: news, chart) and Wendy's (WEN: news, chart) to follow suit.
Kalinowski sees the move as a "mild positive" that will help speed up transaction times.
"However, we would not get carried away with the potential for this move to enhance business," he said. "We estimate that the most likely sales boost to 2003 U.S. same-store sales lies within the zero to 1 percent range -- reasonably nice, but not nearly enough to get us to move away from our 'underperform' rating."
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.