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McDonald's Ties Up With Postmates to Augment Delivery Services

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In an effort to drive incremental sales, McDonald's Corporation MCD has collaborated with Postmates, a leader in on-demand food delivery. Staring this week, McDelivery will be available on Postmates in more than 300 restaurants in the Los Angeles and Dallas areas.

McDelivery, which was launched in 2007, now provides delivery from more than 25,000 restaurants in over 75 countries. In the United States, the delivery service is available in more than 10,000 restaurants. In third-quarter 2019, the company partnered with Grubhub for the rollout of McDelivery to nearly 500 restaurants in the NYC and Tri-State areas. It also partnered with DoorDash. Per management, global delivery contributed more than $4 billion in sales to both McDonald's and its franchise restaurants in 2019.

We believe the aforementioned efforts will help the company to drive sales. Moreover, the company is undertaking digital initiatives to serve customers better, with nearly all of its U.S. restaurants now using digital menu boards. Additionally, McDonald’s continues to roll out mobile order and pay with a new curbside check-in option.

Bud Lord, senior director of U.S. delivery for McDonald's said, “As customers demand more convenience, McDonald's restaurants around the world are working with multiple partners to support the growth of McDelivery.”

With Internet, digitalization and electronics influencing becoming an integral part of our day-to-day lives, it is only too natural that the restaurant industry has embraced this online trend. We believe foodservice delivery services have contributed significantly to restaurant sales over the past few years.

Price Performance

Shares of of this Zacks Rank #2 (Buy) company have gained 10.5% in the past year, compared with the industry’s rally of 5.5%. The upside can primarily be attributed to global comparable sales growth and sales building efforts. Notably, in 2019, the company recorded highest global same-store sales growth in a decade. The company’s increased focus on delivery and accelerated deployment of EOTF restaurants in the United States is commendable. Additionally, the company is making every effort to drive growth in international markets.

Other Key Picks

Brinker International, Inc. EAT has a long-term earnings growth rate of 6.5% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chipotle Mexican Grill, Inc. CMG has a long-term earnings growth rate of 19.3% and a Zacks Rank #2.

Domino's Pizza, Inc. DPZ has a long-term earnings growth rate of 13.4% and a Zacks Rank #2.

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