The New Menu Option At McDonald's: Plastic

Soon, even Happy Meals will earn you frequent-flier miles.

After years of testing, McDonald's Corp. will make it possible next year for customers nationwide to pay for their burgers and fries with plastic. Other big chains are conducting their own experiments with credit and debit cards and are expected to follow suit once McDonald's gets into the game.

Fast-food chains are among the last holdouts in a card-mad world. Over the past decade, gas stations, grocery stores and even the phone company have all bent to the will of consumers who want to charge everything they buy. Some people prefer not to carry cash. Others want frequent-flier miles or cash back for their purchases or other credit-card perks.

For frequent fast-food patrons, the tabs could add up to thousands of extra frequent-flier miles each year. The average fast-food consumer eats 16.4 times a month at a fast-food joint, and so-called heavy users, fast food's equivalent of frequent fliers, eat 27.5 times a month, according to Sandelman & Associates Inc., a Villa Park, Calif., restaurant market-research firm. For mileophiles, who put every last dime on their cards, it's a welcome change. While it may not add up to more than a couple thousand miles each year, that's often the difference between having enough for a free trip to Disney World and having to pay for the ticket with cash.

Plus, if card use catches on, lines will get shorter, because powerful processors and faster networks are making plastic faster than cash. If all goes according to plan, with the latest systems, a McDonald's customer will be able to place an order at a counter or drive-through, swipe his or her credit card, and get an approval in under five seconds -- no signature required -- in the same way that customers pay for gas at the pump. Cash, by contrast, can take eight to 10 seconds, says Jim Sappington, McDonald's vice president of U.S. information technology. The typical credit-card transaction takes 25 to 30 seconds from swipe to signature, according to The Nilson Report, a payment-card newsletter.

That means the chains can serve more customers in the same amount of time -- the grail of the fast-food industry. Every second is crucial to the nation's No. 1 burger chain, which aims to get customers in and out in 90 seconds. Meanwhile, at a time when burger chains worry that poor service and long waits are turning off customers, they are eager to improve customers' experiences.

Clara Herrera, a 35-year-old Lilburn, Ga., mother of two, says she can't wait to start charging away at McDonald's. She visits the Golden Arches twice a week and likes that the $12 she spends for two Happy Meals and a Big Mac, fries and soda will help her earn Delta Air Lines miles on her American Express . "I'd go to Spain if I had enough miles," says Ms. Herrera.

One reason customers have had to wait so long is that McDonald's was worried that it would lose the "fast" in fast food if its outlets had to run thousands of cards through their cash registers during the lunch rush. Today, improved technology and the standardization of cash registers are speeding up processing.

McDonald's took the first step in 1998 when it started a kitchen overhaul aimed at making food hotter and fresher. The plan, known as "Made For You," included an upgrade of cash-register systems that now allows for high-speed connections to the credit-card companies. Over the past two years, McDonald's has tested various cashless systems, including paying via Mobil Speedpass wands and a biometric system using fingerprints linked to credit-card data.

The Oak Brook, Ill., chain says that while it will continue to study these other cashless options, it will move forward with a plan for restaurants to accept credit and debit cards starting in the middle of next year. Individual franchisees will decide whether they want to accept plastic, but McDonald's says interest is strong.

Irwin Kruger, a New York franchisee who owns seven McDonald's, says he welcomes plastic because that's what consumers want. "I would bet we would have a third of our customers jump on it, especially on weekends when you have families and the average expenditures might be a little higher." A typical fast-food user spends about $3 to $4 for a meal.

Other fast-food chains are racing to install similar technology. Subway, a unit of closely held Doctor's Associates Inc., is already letting diners use cards at half of its U.S. outlets. Jack In the Box Inc., a San Diego-based burger chain, is also making it possible for its restaurants to accept credit and debit cards, with plans for half the system to be ready by May of next year and the rest by 2004. KFC and Long John Silver's, both owned by Yum Brands Inc., started to make plastic an option last year. Diageo PLC's Burger King, the nation's No. 2 burger chain, and Wendy's International Inc., the nation's No. 3 burger chain, began tests this year.

While the chains that take credit cards do have to pay fees to credit-card companies, those fees are offset by test results that indicate consumers spend more when they charge. Indeed, a Visa U.S.A. study released this month showed that the average fast-food transaction with credit cards was 20% to 30% higher than cash. Subway says the average credit transaction has doubled to $9 since the chain started to roll out cards three years ago.

But the biggest incentive is speed. The new system, says Mark Crager, vice president of merchant sales for Visa, "reduces the likelihood of people seeing a big line and continuing to drive by." Both the card companies and the chains figure that people won't be scared by the fact that they don't have to sign for their purchases, because many people are already doing this at the gas pump. While there is a small risk that people might try to use stolen cards to buy Big Macs, thieves are more likely to head to an electronics store.

Write to Shirley Leung at and Ron Lieber at

Faster Food

McDonald's spent $181 million to upgrade its kitchen operations, making it possible for its cash registers to have high-speed access to credit-card processors.

Step 1: Customer places order, then swipes card to pay.

Step 2: Approval takes 4 to 5 seconds, compared with 8 to 10 for cash.

Step 3: No signature required. McDonald's aims to get customers in and out in 90 seconds.


Popular on WSJ