McDonald’s Takes a Small Bite of E-Commerce

McDonald’s Corporation (Nasdaq:MCD) has taken a baby step into e-commerce by investing in San Francisco, California-based Food.com, a company that offers an online food takeout and delivery service.

Food.com raised $80 million (US$) in total funding from such companies as McDonald’s, Kraft Foods, TV Guide and Blockbuster Video. Terms the deal were not disclosed, but the investment was apparently triggered by the fact that McDonald’s subsidiaries Donatos Pizza, Chipotle Mexican Grill and Boston Market are already listed on the site.

No Big Macs Online

Food.com visitors can browse menus from more than 14,000 restaurants nationwide and then place orders online.

However, the announcement does not mean that consumers will be able to order Big Macs over the Internet. “This is not really about hamburger delivery, it’s an innovative way to connect our brands and customers,” McDonald’s spokesman Mike Gordan told the E-Commerce Times.

“While McDonald’s remains absolutely focused on our core business, we are also committed to new thinking and new technologies for all aspects of our brand,” James Cantalupo, president and vice chairman of McDonald’s, said in a statement.

Many analysts view McDonald’s investment as a means of learning about food-related e-commerce, while also dipping its toes in the water through several of its smaller subsidiaries. However, if Food.com is successful in establishing a growing home delivery business, McDonald’s will be well-positioned to move in that direction.

Expansion Plans

Food.com said it plans to use the latest funding to fuel its expansion. Unlike most business-to-consumer (B2C) sites that ship products nationwide, Food.com’s take-out and delivery service requires a local presence in every city where it does business.

Food.com is also using the funds to position itself in both business and consumer markets. On the consumer side, Food.com has strategically chosen locations near major universities to serve college students, whom it believes to be prime candidates for its services.

In addition, Food.com has entered into a partnership with America Online to serve as its home delivery food company.

On the business side, the company has developed special catering menus to make it easier for companies to provide for food at business events. It also has solicited restaurants to put their menus on Food.com, in particular, to help attract business travelers.