By the end of the year, the fast food giant will offer mobile pay in all of its 20,000 restaurants worldwide, according to CEO Steve Easterbrook. The company also will expand its delivery and curbside pickup services in the U.S. To implement these digital functionalities, McDonald will heavily invest in staff training, which the company anticipates will have a negative impact on margins in the next six months to a year.
"We are increasingly driving traffic with digital offers," he said on the company's third-quarter earnings call on Tuesday, Oct. 24. "We remain on track to deploy [mobile pay] in 20,000 restaurants by the end of the year."
McDonald's began piloting its mobile pay platform, available through its app, in March in regions of California and Washington state. It's now available in 6,000 restaurants. The Big Mac maker got in the game late compared with competitors like Shake Shack Inc. (SHAK - Get Report) and Domino's Pizza Inc. (DPZ - Get Report) , the latter of which has been refining its mobile pay function for years.
"We're still in the early innings," said Chris Kempczinski, McDonald's president of U.S. operations, citing 30 million downloads and 9 million active monthly users. After the function is available in every restaurant, McDonald's will make a major marketing push in 2018, he added.
Delivery, now available in 3,700 U.S. restaurants, is on track to reach 5,000 by year-end, according to Kempczinski.
"We're learning a lot about delivery and seeing success in dense urban metros with commerce like New York, Boston, Miami and Los Angeles," he said during the earnings call. "I truly believe we're just beginning to scratch the surface on this opportunity."
Last year, McDonald's unveiled its "Experience of the Future" initiative, under which self-serve kiosks were rolled out across restaurants worldwide. So far, it's been a driver of sales, according to the fast food execs. Right now, 13% of McDonald's in the U.S. contain the kiosks, and that will increase significantly over the next couple of years, Kempczinski said.
McDonald's posted earnings of $1.76 a share and a 6% increase in global comp sales in its third quarter. Same-store sales in the U.S. grew by 4%, an uptick that the fast food giant attributed to its new Signature Crafted premium sandwiches and the McPick 2 deals.
The stock rose 1% on Tuesday to Tuesday to $164.93.
Tuna Amobi, equity analyst at CFRA Research, upgraded his target price on McDonald's by $5 to $175.
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