Dive Brief:
- McDonald's has agreed to acquire Israeli startup Dynamic Yield, a technology company focused on personalization and decision logic, for $300 million, according to a press release.
- The fast food chain will use this technology to create a more personalized experience that will include new outdoor digital drive-thru menu displays that can change depending on the time, weather, current restaurant traffic and trending menu items.
- McDonald's originally tested the technology in several U.S. restaurants in 2018 and plans to roll it out across its U.S. restaurants and then expand it to its top international markets. The chain also plans to integrate Dynamic Yield's technology into all of its digital customer experience touch points, including self-order kiosks and its Global Mobile App, according the press release.
Dive Insight:
Acquiring a tech company to assist with digital integration is a new strategy for the fast food segment, and McDonald's claims it is one of the first to bring decision technology into point of sale within its brick and mortar locations. The restaurant also rarely acquires companies, according to The Wall Street Journal, but this acquisition is of strategic importance and falls within the company's Velocity Growth Plan, which is all about improving the customer experience through better convenience.
McDonald's has already been making technological improvements. At the end of 2018, it had deployed self-ordering kiosks to about 17,000 restaurants, brought digital menu boards to 21,000 restaurants and added its order and pay app to 22,000 restaurants, according to the company's annual report. It has also invested $6 billion in renovating existing stores to integrate more technology.
The company's focus on technology isn't a surprise, as it hinted earlier this month that it had plans to improve the drive-thru experience. Even with its tech rollouts over the last two years, it has fallen behind in recent years due to a shortage of labor, switch to fresh quarter pounders and inclusion of all-day breakfast and premium products that take longer to make.
As of October, it had the worst drive-thru times among the top 10 chains, averaging 273 seconds compared to its top competitor Burger King, which averages 193 seconds, according to QSR Magazine.
The addition of Dynamic Yield's technology means restaurants can adjust their outdoor menus depending on the weather, promoting an ice cream cone during warm days, for example, according to The Wall Street Journal. It can suggest additional items that would work well with an existing order and show customers items that are popular at the restaurant, according the press release. Considering drive-thrus can make up to 70% of sales, any advantage could help improve sales overall and provide a unique experience that isn't yet replicated by competitors.
