Photo: McDonald’s
McDonald’s to use tech to make drive-thru menu recommendations
McDonald’s has announced an agreement to make its largest acquisition in decades, but the new deal is for a technology startup, not another food chain. Yesterday, the fast food giant announced it would pay more than $300 million to acquire Dynamic Yield Ltd., a firm that specializes in creating personalization and decision logic tech.
What this will mean for McDonald’s customers is that the menu displays they see when they pull up through the chain’s drive-thrus will vary based on the time of day, weather, customer traffic at the location and items trending at that location. The technology will also be able to “instantly suggest and display additional items to a customer’s order based on their current selections.”
Source: McDonald’s
McDonald’s, which initially tested the technology at several restaurants last year, plans to initially roll it out at drive-thrus before deploying it at ordering kiosks inside its locations and on the chain’s mobile app.
“With this acquisition, we’re expanding both our ability to increase the role technology and data will play in our future and the speed with which we’ll be able to implement our vision of creating more personalized experiences for our customers,” said Steve Easterbrook, president and chief executive officer, McDonald’s Corporation, in a statement.
- McDonald’s to Acquire Dynamic Yield, Will Use Decision Technology to Increase Personalization and Improve Customer Experience – McDonald’s Corporation
- McDonald’s Buys Israeli Digital Startup Dynamic Yield – The Wall Street Journal
- A future visit to a McDonald’s drive-thru will soon be similar to shopping on Amazon – USA Today
Discussion Questions
DISCUSSION QUESTIONS: What benefits will McDonald’s see with the deployment of recommendation tech at drive-thrus, in-store kiosks and on its mobile app? How do you expect McDonald’s direct competitors and others to react to this acquisition?
Poll
BrainTrust
David Weinand
Chief Customer Officer, Incisiv
Kai Clarke
CEO, President- American Retail Consultants
AI companies like Dynamic Yield are seeing up-sell rates of 20 percent to 50 percent in drive-thrus and petro sell screens. Incredibly smart move by McDonald’s to acquire the current leader in that space, to remove the opportunity for their competition. Luckily for their competition, Dynamic Yield also has competitors, who I expect are cheering like mad right now.
When close to 75 percent of McDonald’s business is generated through their drive-thru, it is highly strategic to find ways to optimize the channel. McDonald’s is showing they clearly know their business and to focus on a solution that can provide better personalization based on buying patterns, weather, traffic, etc. is brilliant.
This is brilliant. The underlying promise of personalization is solving for the paradox of empowering consumers with near infinite choice, while simultaneously simplifying the decision making process. Not only will McDonald’s win with more sales, they’ll win as a preferred stop for the busy drive-thru customer.
Smarter boards will enhance the consumer experience. However, this will not create a new epiphany of understanding or a new customer experience standard. There are so few expectations for this part of the customer experience, that any change is minor at best.
I love AI and I am very excited to see its use popping up but this one doesn’t really sit with me. I don’t know about the rest of you but when I go through the drive-thru it is usually because I’m in a bit of a hurry. I know what I want already. It is the last place that I am going to be pondering my order and want suggestions. I could see this play much better in-store. I’ll be interested in seeing how this works out for them. And that’s my 2 cents.
I think this is smart and I am sure it will help drive some impulse purchases by highlighting products of interest. That said, most people already know what they want from McDonald’s when they drive up.
The new technology should speed drive-thru service time and should simplify forecasting of food demand. But what about customers who want personalization, whether at an in-store kiosk or in the drive-thru lane? Maybe this idea can be modified with some kind of cell-phone driven geofencing, allowing each drive-up customer to see a menu customized to his preferences.
For a number of reasons , the drive-thru line isn’t the best spot for an attack of indecision … but will this solve that problem or make it worse? For people who are regulars, a different arrangement might prove aggravating (though of course many of these people have the menu memorized and won’t even be looking at the screen). For the undecided — and I assume that’s who this is aimed at — it might well speed the process. Since I’m sure McD’s will thoroughly test and if necessary tweak the installation(s), I think it’s worth a shot.
This is a great use of AI to improve the drive-through experience and generate more impulse buys at the point of sale. Smart move by McDonald’s — given that over 70% of their sales comes from the drive-through this is almost a no-brainer decision! Expect to see other brands take notice, especially since some have an even higher percentage of sales through the drive-through than McDonald’s!
According to a 2018 restaurant guest study by Incisiv, for 71% of consumers, ease of ordering and payment is an extremely important factor in deciding where they dine (QSR/fast casual dining restaurants). Greater personalization of drive-thru digital menu boards, kiosks and mobile apps will improve the guest experience and, hopefully, make the ordering process more convenient.
In addition to dynamic displays, restaurants should investigate other technologies that speed drive-thrus and make in-store ordering more efficient. For example, using GPS tracking or license plate recognition on loyal customers that opt-in to recognition programs would enable restaurants to populate the screen with the frequently ordered items or have their mobile orders ready when they arrive at the restaurant.
This is a wake-up call for McDonald’s competitors, as they will need to make personalization a high priority – if they haven’t already.
This is a great move by McD’s. They’re thinking more like a retailer that wants to know about their customers than a QSR. They will see improved sales, more complication in their delivery process (not good, but price of doing recs), and most importantly, capture more information about their local customers.
As for the “AI” aspect here, I believe this will start with basic recommendations and generic personalization during the drive-through. The interesting point will come when they can begin matching license plates to customers during the drive-thru experience.
McD’s competitors will now start looking to copy this move, at least in concept, if not spending the $300MM for a purchase. Other vendors in this space will be jumping for joy with many VC’s thrilled to see an exit opportunity.