McDonald's 'bad trade' reveals the hidden value of loyalty
Mark Sage - 8 min read - 18/08/2026
Reading McDonald’s Q2 earnings calls from 2025 and 2026 back-to-back tells an interesting story about loyalty, digital transformation and what happens once the infrastructure you spent years building becomes business as usual.
In 2025, the tone was optimistic. McDonald’s talked about its progress to “Digitize the Arches”, its consumer platform, and the opportunity to create what it described as a “step change” in sales and margins.
The ambition was significant. McDonald’s had set a target of 250 million 90-day active loyalty users by the end of 2027 and had already reached more than 185 million across 60 markets.
More interesting than the scale was why they were doing it.
McDonald’s already estimated that 80–90% of the U.S. population visited its restaurants. In a market with that level of penetration, the growth opportunity isn’t primarily customer acquisition. It is frequency.
As management put it:
“As you get more and more consumers into that, you’re going to see the frequency benefits.”
And they had a remarkable number to support it. In the U.S., the same customer visited McDonald’s an average of 10.5 times in the year before joining the loyalty programme and 26 times in the year after.
Not members versus non-members. The same customer.
There will inevitably be some self-selection in that number, but the scale of the difference makes the strategic rationale clear. Getting more customers actively using the consumer platform creates an opportunity to increase frequency, and frequency matters enormously when almost everyone is already a customer.
China provided the aspiration. Management pointed to markets like China, where digital participation could reach around 90%, as the point at which “really significant benefits” begin to emerge.
But those benefits weren’t simply about offers or points.
McDonald’s talked about Ready on Arrival, where restaurants could reduce food collection wait times by more than 50%. It talked about common platforms and standard infrastructure allowing innovation to scale at speed. Loyalty was part of something much bigger: an attempt to connect the customer into the operating infrastructure of McDonald’s.
Fast-forward twelve months and much of that infrastructure is now in place.
In its Q2 2026 call, McDonald’s said it was close to having all its major markets operating on one app, one loyalty programme, one pricing engine, one HR system and one finance system. The company expects that common infrastructure to reduce costs and accelerate innovation.
Then came another potentially significant development:
“With all our data soon to be pooled in a global data lake, we’ll also be well positioned to capitalize on the new opportunities afforded by artificial intelligence.”
This is the next logical stage of the journey.
First, build the customer platform and create identity across more of the customer base. Then connect the data generated by those interactions. AI creates the opportunity to turn that data into something far more valuable: customer understanding.
Not simply knowing that someone buys breakfast, but understanding their patterns, preferences, changing behaviour and potentially what they need next.
McDonald’s has built much of the infrastructure required to do that at extraordinary scale.
And yet, elsewhere in exactly the same earnings call, came a warning about what can happen once that infrastructure becomes established.
The "bad trade"
McDonald’s had introduced an under-$3 Everyday Affordable Price menu as part of McValue. To help fund that investment, the U.S. business pulled back significantly on digital offers and removed its Buy One, Add One for $1 promotion.
This wasn’t an accidental system error. It was a trade-off.
On the surface, it probably appeared entirely rational. Invest more heavily in a broad value proposition while reducing promotional investment elsewhere.
The problem was that the organisation appears to have misunderstood where some of that value now lived.
McDonald’s explained:
“Digital offers for us is something that is core to kind of our loyalty program. It’s something that’s valued by our most loyal customers. And so that ended up being a bad trade.”
The new EDAP proposition itself didn’t generate the incrementality expected, while the reduction in digital offers affected visits from some of McDonald’s most loyal customers. Combined with other value execution issues, management estimated these factors accounted for around two-thirds of the customer traffic underperformance against expectations for the quarter.
The response is telling. McDonald’s is bringing back national digital flash offers to “reenergize our high-frequency customers” and plans to target its most loyal users with more personalised digital offerings.
There is an important lesson here that goes well beyond McDonald’s.
Once a Customer Platform becomes established, its value can become remarkably easy to forget.
During the investment phase, everyone needs to understand the business case. The organisation talks about customer growth, frequency, engagement, data and new capabilities because that is what justifies building the infrastructure.
Once it is running, those benefits become part of the baseline.
The app is just there. Loyalty is just there. Customers identifying themselves are just there. The data is just there.
What remains highly visible are the costs.
Reward cost. Promotional funding. Technology spend. Campaign budgets.
And individual parts of an organisation inevitably start making perfectly rational decisions against the costs and objectives they can see.
That is what makes the McDonald’s “bad trade” so interesting. The business wasn’t simply removing a discount. It was taking value away from an experience its highest-frequency customers had come to value, in order to fund a different form of value elsewhere.
The platform is part of the product
This is where Customer Platforms become fundamentally different from traditional loyalty programmes.
Once ordering, payment, value, recognition, fulfilment and identity become connected through the platform, the platform itself becomes part of the customer experience. Its value can’t be assessed simply by adding up the cost of the individual benefits sitting within it.
McDonald’s own numbers demonstrate why.
If the same customer moves from 10.5 visits before joining loyalty to 26 afterwards, the economic question isn’t simply what the digital offers cost. It is what role the overall platform plays in creating and maintaining that additional frequency.
That doesn’t mean mass value has somehow become obsolete. Quite the opposite.
McDonald’s itself noted in 2025 that nationally advertised price points create significantly more incrementality than fragmented local pricing. In 2026 it also acknowledged that too many competing messages make it difficult for anything to break through.
Brand, product, price and place still matter enormously. National advertising around a breakfast occasion creates the mental availability that puts McDonald’s into the consideration set in the first place.
The Customer Platform builds on that demand and compounds its value. It can remove friction, recognise the customer, provide relevant value, improve the experience and create more reasons to return. Over time, individual occasions can become habits and individual transactions can become relationships.
Which brings us back to AI.
McDonald’s is right to see enormous opportunity in bringing its data together and applying artificial intelligence to it. But the ultimate opportunity isn’t the global data lake, and it isn’t AI itself.
It is better customer understanding.
The ability to understand customers across interactions, recognise changes in behaviour and respond with greater relevance could make the Consumer Platform dramatically more valuable.
But there is an important dependency.
There needs to remain something worth engaging with.
One app, one loyalty programme and one data infrastructure creates the rails. AI can make what travels along those rails much more intelligent. But if individual parts of the organisation gradually remove the customer value that encourages people to use the platform in the first place, the infrastructure becomes increasingly hollow.
That is why I think McDonald’s “bad trade” is more interesting than a quarterly execution mistake.
It demonstrates one of the biggest challenges facing Customer Platforms once they mature.
Building the platform requires the organisation to recognise the value of the customer relationship. Running it requires the organisation not to forget.