Mcdonald's Is Loving Technology

Posted: Sep 27, 2019

McDonald's is investing in technology to stay ahead of the competition and increase sales -- despite the overall restaurant traffic slowdown.

Restaurant traffic is decelerating across the United States, and research by TDn2K suggests that will continue at least through year's end. Fast food behemoth McDonald's (NYSE:MCD) isn't immune to the trend. While the company doesn't break out same store guest counts, management did mention on its conference call that restaurant traffic is down.

Yet McDonald's still notched a huge Q2 comparable sales gain of 5.7% for the U.S. A large reason the company achieved this is due to investments in technology -- a trend that investors should hope continues.

McDonald's the tech company?
While not typically associated with technology, McDonald's is pushing hard on that front. It first made a splash in March by acquiring decision logic company Dynamic Yield. If you're not familiar, decision logic basically analyzes factors that influence certain decisions. Dynamic Yield's technology will look at factors like the time of day and the weather, and will give the customer a suggestive menu based on what it thinks they are most likely to order given the circumstances.

The Dynamic Yield acquisition provides McDonald's with a new personalized customer experience -- whether it's in the drive-thru, at a self-ordering kiosk, or on the app. In theory, it improves the ordering experience, drives efficiency, and increases drive-thru speed. This technology was only available in about 800 locations at the end of July but should now be in over 8,000 locations.

In early September, McDonald's went back for a second helping and acquired communication technology company Apprente. The idea is that Apprente tech -- rather than a person -- will take your order in the drive-thru, something McDonald's believes will increase speed, simplicity, and accuracy of the drive-thru order.

It's not just about technology
McDonald's isn't the only restaurant chain out there pursuing technology. It's probably safe to say that all companies invest in tech in some capacity. Burger King rolled out digital drive-thru menu boards and kiosks -- ones that might look like McDonald's. And Wendy's is implementing self-ordering kiosks at many of its locations and investing heavily in its app.

But something stands out with McDonald's technology acquisitions. Both Dynamic Yield and Apprente consider themselves to be artificial intelligence companies. For the purpose of this discussion, when it comes to AI, think less about human-killing robots and more about data. Data is what artificial intelligence is built on. With these two acquisitions, McDonald's is able to collect more customer data than ever before from which it can build a better consumer experience.

By Jon Quast
September 26, 2019
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