McDonald's Corp (MCD.N) ended its 41-year-old sponsorship of the Olympic Games three years early, the International Olympic Committee said on Friday, reflecting the U.S. fast-food giant's focus on its core business as well as rising Olympics sponsorship costs and declining TV ratings.
McDonald's deal would have run through the Tokyo Olympics in 2020, and bowing out will likely to save it hundreds of million of dollars if it had continued into the next four-year Olympics cycle and beyond.
McDonald's has been trying to hold down costs as it invests in improving food quality, restaurant service and online ordering to woo back U.S. diners. Intense competition has gnawed away at sales.
"We are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities," said McDonald's Global Chief Marketing Officer Silvia Lagnado.
The company, first involved with the games in 1968 and a sponsor since 1976, was the Olympics' food retail sponsor. Despite pulling out with immediate effect, McDonald's will continue at next year's Pyeongchang winter Olympics as a domestic sponsor.
The company's move may also reflect a rising view among consumer brands that exclusive Olympics sponsorship deals do not offer the marketing impact they once did. Some companies find it is much cheaper to work directly with athletes or specific countries than the IOC.
Moreover, in a trend that began after the Beijing games in 2008, shrinking television audiences for the games could be diminishing the value of sponsors' ads. With the Rio de Janeiro games in 2016, many viewers turned to social media alternatives like Twitter Inc (TWTR.N) and Facebook Inc (FB.O).