McDonald's stunned a lot of people yesterday when it announced its biggest acquisition in 20 years--one that reportedly cost it over $300 million.

No, McDonald's didn't buy a competitor.

It bought a tech company.

That's right--McDonald's has reached an agreement to acquire Dynamic Yield, an Israeli startup that specializes in "decision logic" technology. This tech uses data acquired from previous purchases to recommend additional purchases. (Think: the "customers like you also bought" suggestions when shopping on Amazon, for example.)

McDonald's stated it will use its new technology to provide more personalized customer experiences. For example, the company has tested digital drive-thru screens that show food based on various factors, including time of day, weather, and trending menu items. Additionally, the technology can instantly suggest and display items customers might want, based on their current selections.   

Just think of the implications of this. When you're at a McDonald's drive-thru, your order screen could suggest items that are especially popular with other McDonald's customers. (Or other customers in your region.) If it's a cold day, the menu could feature a coffee or tea, front and center.

And what about rush hour, when the drive-thru line tends to get out of control? Well, then the order screen could feature items that are especially quick to prepare, which could help reduce overall wait time.

These developments are already potential game changers. But we've barely scratched the surface.

McDonald's--tech innovator?

This move was surprising for many, but it shouldn't be. 

If you've been following the company the past few years, you know that it has invested heavily in technology by bringing stores up to date with self-serve kiosks, building a very popular mobile app, and even partnering with Uber Eats to provide delivery.

The acquisition of Dynamic Yield will further serve McDonald's overall strategy as a tech innovator.

"What we hadn't done is begun to connect the technology together, and get the various pieces talking to each other," McDonald's CEO Steve Easterbrook told Wired in a recent interview. "How do you transition from mass marketing to mass personalization? To do that, you've really got to unlock the data within that ecosystem in a way that's useful to a customer."

"We've never had an issue in this business with a lack of data," says Easterbrook. "It's drawing the insight and the intelligence out of it."

Easterbrook says McDonald's currently serves 68 million customers a day. Imagine the insights this new tech could provide with that type of data set.

And while many customers are hesitant to offer personal data to companies, others aren't. So imagine what McDonald's could do if customers are willing to let stores personalize the experience even further.

Here are just a few ideas, all of which Easterbrook himself has floated:

  • using license plate recognition to identify a specific customer as he or she approaches a store, and then adjusting the digital menu based on that customer's purchase history;
  • making personalized offers to customers via McDonald's' mobile app; and
  • using predictive analytics to inform kitchen and supply chain decisions.

Now, imagine how profitable changes like these would influence the fast food industry as a whole.

Then, there's one more interesting factor about the plans McDonald's has for Dynamic Yield. 

According to Wired, the company will continue to run independently after the acquisition. On its website, Dynamic Yield has a client list of over 180 companies, including Ikea, Sephora, Fendi, and a number of other major retailers. 

With the resources of the world's most popular fast food restaurant, Dynamic Yield could take its product to new levels. That means, not only would McDonald's benefit from a host of retailers' experiences, but that those retailers would essentially be getting their tech insights from a company owned by McDonald's.

Now, who would have seen that coming?

As for exactly how far-reaching the new McDonald's acquisition will prove to be, I guess we'll just have to wait and see.

But one thing's for certain: 

McDonald's is ready to spend to find out.

Published on: Mar 27, 2019
Like this column? Sign up to subscribe to email alerts and you'll never miss a post.