What are the incremental costs (delivery fees, commission splits) and how will they affect overall margins?
Incremental cost structure
The new âMcDeliveryâŻvia webâ model adds two explicit cost layers to the existing restaurantâtoâconsumer flow:
Cost element | Typical rate (industryâaverage) | How it is likely to be booked |
---|---|---|
Deliveryâfee to the consumer | $0.99âŻââŻ$2.49 per order (flat fee, sometimes waived on highâticket orders) | Recorded as âserviceârevenueâ for DoorDash and as âdeliveryâexpenseâ for McDonaldâs (net of any passâthrough to the Dasher). |
Commission split | 20âŻ%âŻââŻ30âŻ% of the order value paid to DoorDash (the remainder is retained by McDonaldâs) | For McDonaldâs this is a reduction to restaurantâmargin; for DoorDash it is a pure grossâprofit line (grossâmargin ââŻ70âŻ% on the commission). |
Because the partnership eliminates the need for a dedicated McDonaldâs app, the incremental cost is limited to the perâorder fee and the commission. There is no additional technologyâlicensing expense, and the ânoâloginâ experience should boost order volume while keeping the cost base flat.
Impact on overall margins
McDonaldâs:
- Restaurantâmargin on inâstore sales typically runs in the highâ30âŻ% range. Adding a 20âŻ% commission on the order value will shave roughly 5â7âŻ% off the net restaurant margin for each McDelivery order (e.g., a $10 basket â $2 commission, leaving $8 of restaurantâgross).
- The flat deliveryâfee is passed to the consumer, so it does not erode the restaurant margin directly, but the net effect is a modest drag on the overall operating margin (ââŻ1â2âŻ% of total U.S. comparableâsales, given that McDelivery still represents a small share of total sales).
- However, the partnership is expected to lift comparableâsales growth by 2â3âŻ% YoY in the U.S., partially offsetting the margin hit. If the incremental volume exceeds the costâofâsales drag, the net effect could be neutral to slightly positive for earningsâperâshare (EPS).
DoorDash:
- The commission is the primary revenue stream; with a 70âŻ% grossâmargin on that commission, DoorDashâs grossâmargin remains high (ââŻ80âŻ%). The incremental cost is limited to Dasher payouts (ââŻ$0.99â$2.49 per order) and modest overhead for the web platform.
- As order volume scales, the fixedâcost base (customerâacquisition, platform maintenance) is spread over a larger order count, improving DoorDashâs operating leverage and expanding its adjusted EBITDA margin.
Trading implications
- McDonaldâs (MCD): The partnership is a modest upside to comparableâsales with a small, predictable margin drag. Analysts should look for a marginâadjustment guidance in the next earnings release. If management signals that the incremental commission cost is being offset by higher order frequency, the stock could see a 10â12âŻ% upside from the current price (typical for a âmarginâneutralâ growth catalyst). Conversely, any surprise that the commission is higher than anticipated (e.g., 30âŻ% instead of 20âŻ%) could compress the operating margin and trigger a 5â7âŻ% downside.
- DoorDash (DASH): The deal adds a highâmargin, lowâcost revenue stream that should lift DoorDashâs topâline growth without materially expanding SG&A. Expect the priceâtoâsales (P/S) multiple to compress modestly if the market already priced in the partnership; however, a beatâandâraise on order volume will likely push the stock 10âŻ%+ higher on the next quarterly update. Watch for the âdeliveryâfee waiverâ policyâif DoorDash begins subsidizing fees to win market share, the grossâmargin could be pressured, creating a 10âŻ% downside risk.
Actionable takeâaway: Keep a longâbiased stance on DoorDash pending confirmation of volume growth and stable gross margins, while maintaining a neutralâtoâslightly bullish view on McDonaldâsâwith a focus on the upcoming earnings call for margin guidance. A shortâterm swing trade could be structured as a buyâMCD on any pullâback below the 200âday moving average, targeting the next resistance at $285, and a long DASH on a breakout above $210, with a stop at $190.