How McDonald’s Is Using Artificial Intelligence & Digital to Drive Traffic

Woman eating McDonald’s

By Tricia McKinnon

As many retail businesses continue to be disrupted by technology McDonald’s is trying to stay ahead of the curve.  After nearly 71 years in business McDonald’s is working hard to modernize the customer experience.  McDonald’s CEO Steve Easterbrook has said: “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."  

The company’s focus on technology is also one the avenues it is using to boost traffic. As people continue to eat out less McDonald’s has struggled to increase traffic.  Speaking about this Easterbrook said: “Last quarter [Q1 2019], we did grow traffic, and we did grow traffic over the last couple of years, but only modestly and we want to be stronger than that.”  Exactly what is McDonald’s doing to take its traffic to the next level and modernize itself?   Three key areas that it is focusing on are more personalized recommendations based on artificial intelligence (AI), digital order taking kiosks and mobile order and delivery.  See what McDonald’s has in-store for a drive thru near you.

1. In March of this year McDonald’s made its biggest tech investment ever.  It acquired Dynamic Yield an AI start-up based in Tel Aviv and New York for over $300 million.  Dynamic Yield focuses on providing personalized customer experiences using AI.  The acquisition is McDonald’s largest purchase in 20 years and is one of the largest tech investments in the retail sector.  The investment clearly shows that the fast food chain doesn’t plan to be left behind as other firms in the fast food business such as Domino’s pizza continue to invest in their digital capabilities. McDonald’s began working with Dynamic Yield back in 2015 and the fast food chain believes that artificial intelligence will having a meaningful impact on the customer experience as well as the bottom line. 

First, it is expected that digital displays in the drive thru will change dynamically to provide customers with more customized recommendations.  For example, data such as weather, time of day, historical sales information and traffic patterns will be analyzed to make more meaningful food recommendations by store location.  Or if a parent orders two happy meals then a recommendation to purchase a coffee and a muffin may display to remind the parent to pick up something for themselves. Other potential uses of the AI recommendation engine may be to provide simpler menu options when the drive thru is backed up to help to reduce the backlog in the kitchen.  McDonald’s CEO Steve Easterbrook has also said that “if customers are willing to identify themselves—there’s all sorts of ways you can do that—we can be even more useful to them, because now we call up their favorites.”  

McDonald’s hopes to use the technology not only in the drive through but in other parts of its business.  Speaking about the initiative, Daniel Henry, McDonald’s Executive Vice President and Global Chief Information Officer said: “like anything else, we’re going to see that this has a capability for in-store kiosks, it has a capability for kitchens, for mobile order and pay.” “If we try to do that at once, we may lose focus. And we need to stay focused.”  The technology is now being used at 700 drive-thrus and will be integrated into all of McDonald’s digital platforms.

2. McDonald’s started to roll out digital order taking kiosks in 2015 and plans to have them in nearly all of its 14,000 restaurants by 2020.  One of the benefits of these kiosks is that it allows customers to easily customize their orders.  Since customers are entering the orders themselves this is often done with a higher degree of accuracy than if they told an employee.  Customers can also request to have their order brought to their table which restaurant staff can find using a digital locator. McDonald’s has found success with its digital kiosks as customers often order more, they reduce transaction times and allow restaurants to allocate more time to delivering food to customers.

3. Not to be left behind as online order delivery grows, McDonald’s partnered with Uber Eats back in 2017.  Currently food delivery is a small part of McDonald’s business representing only 2% to 3% of the company’s sales.  But in China where delivery has been available for more than ten years that number is much higher, with McDonald’s food delivery sales representing 10% of total sales. It is predicted by 2020 that 11% of quick service restaurant orders will be made ahead of time using mobile.  Perhaps McDonald’s is trying to take a page from Starbucks’s playbook. Starbucks is the leader in mobile payments with Starbucks’ CFO stating last year: "almost all of our same-store sales growth is from those customers that we have digital relationships with and those that are in our Starbucks Rewards program."

 

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