McDonald's May Become the King of Artificial Intelligence in Fast-Food Industry

Jon C. Ogg

McDonald’s Corp. (NYSE: MCD) is not exactly the type of company you expect to hear about in merger and acquisition news. The king of fast food is acquiring a seven-year-old Israeli startup company called Dynamic Yield for a reported $300 million. This appears to be the company’s largest acquisition in the past two decades.

The company’s digital food menus may help to tackle a problem of higher drive-thru window times. Its digital screens will track wait times and also will allow McDonald’s to better identify which items on its menu will be quicker and easier for the staff to prepare. McDonald’s already has started migrating to digital ordering kiosks, and if this move works as well as the test markets would indicate, then McDonald’s very well may become the king of artificial intelligence within the fast-food industry, along with its 37,000-plus locations.

McDonald’s executives already have said that they will focus on curbing those drive-thru wait times. Those times reportedly have been rising over the past five years.

There is a reason that McDonald’s is high on our own list of 15 defensive stocks that will easily survive and continue to thrive the next market sell-off. That said, there is also an ongoing question about how many jobs will be lost to the technology here.

McDonald’s said in its release that it plans to utilize the decision technology to provide a more personalized customer experience by varying outdoor digital menu displays in its drive-thrus. It will show food based on the time of the day and will account for items based on the weather, current restaurant traffic and the current “trending” menu items. Using this decision technology also will allow instant suggestions and display additional items to a customer’s order based on their current selections.

The acquisition comes after McDonald’s tested the technology in several U.S. restaurants during 2018. After the merger closes, the company plans to roll this decision technology out in drive-thrus in the United States in 2019 and then expand it to other top international markets.

The company is not going to only keep the AI-powered Personalization Anywhere platform all to itself. The press release indicates that Dynamic Yield, based in Tel Aviv and in New York, will remain a standalone company and that the company will continue to serve its existing clients and will attract future clients. Dynamic Yield currently serves more than 300 brands across the world.

Steve Easterbrook, president and CEO of McDonald’s, said of the effort:

Technology is a critical element of our Velocity Growth Plan, enhancing the experience for our customers by providing greater convenience on their terms. 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.

McDonald’s shares were last seen up 1.2% at $188.00 on a day that the Dow Jones industrials and the S&P 500 were each up by 0.9%. Its 52-week trading range is $153.13 to $190.88.