Skift Take
Personalized customer purchasing data will be a huge benefit to the company's future strategy.
— Erika Adams
McDonald’s is moving fast to outfit its restaurants with upgraded, Dynamic Yield-fueled smart menu capabilities. The update comes just weeks after the company publicly announced the $300 million acquisition of the tech company.
McDonald’s CEO Steve Easterbrook told analysts on the company’s first-quarter earnings call on Tuesday that Dynamic Yield’s personalization and “decision logic” tech has already been installed in 700 restaurant drive-thrus across the U.S.
At those restaurants, the digital menu boards at the drive-thru take into account local factors that may influence diners’ ordering decisions. Displays can change for the time of day, the weather forecast, or trending menu items.
For example, the menus highlight hot tea while it’s raining and ice cream on sunny afternoons, and McDonald’s reaps the benefits of the data that it collects to learn and eventually influence future purchasing behavior.
“Over time, using data from the millions of customer that we serve daily, the technology will get smarter and smarter through machine learning,” Easterbrook said. That data will be useful in a number of ways, whether to inform more effective staffing and planning operations around busy times in each store, or to leverage loyalty and rewards to upsell customers.
Easterbrook noted that the company is turning its full attention to improving drive-thru service in general this year, seeing it as a channel that warrants further optimization. Speed of service, in particular, will get better: McDonald’s already implemented drive-thru service competitions between restaurants in the first quarter to shave down order times.
Future Tech Investments
McDonald’s Chief Financial Officer Kevin Ozan has previously said that the company is focused on spending wisely on technology innovations, and the company revised its guidance on general and administrative (G&A) expenses for the year to reflect that thinking. The company expects G&A spending to remain flat throughout 2019 compared to last year. Previously, McDonald’s had guided a 4 percent decrease in G&A expenses in 2019.
“We reduced the amount of the day-to-day business G&A and now we’re investing a bigger percentage of our G&A in growth-based G&A,” Ozan explained. Aside from the Dynamic Yield acquisition, the company also invested in other forward-looking research and development initiatives in the quarter.
As McDonald’s builds up it base of innovative technology, the next step will be integrating all of these initiatives into a full picture of a tech-fueled McDonald’s restaurant.
“If you think about a lot of the investment we and our owner/operators have made in the last two or three years, whether it’s developing the app, self-order kiosks, digital menu boards both in stores and at the drive-thru — we’re now beginning to be at the earlier stages of connecting that technology ecosystem,” Easterbrook said.
