In a bid to fast-track its digital transformation, fast food giant McDonald’s has agreed to acquire AI-powered martech company Dynamic Yield, whose technology it will use to personalize digital customer touchpoints by time of day, weather, current restaurant traffic and trending menu items. The customized content will eventually appear on drive-through displays, on in-store ordering kiosks and in the McDonald’s mobile app.
Though terms of the deal weren’t released, the Wall Street Journal reported it was valued at “$ 300 million plus,” and said it was the quick-service restaurant’s biggest acquisition in two decades.
“Technology is a critical element of our velocity growth plan, enhancing the experience for our customers by providing greater convenience on their terms,” Steve Easterbrook, president and CEO of McDonald’s, said in a statement. “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.”
Brick-and-mortar digital personalization. McDonald’s tested this technology in the drive-throughs of several U.S. restaurants in 2018 and it plans to roll it out in locations across the U.S. during 2019. Subsequently, it will deploy the decision engine internationally and integrate it into the self-ordering kiosks and the mobile app. McDonald’s boasts more than 38,000 locations in over 100 countries around the world.
But McDonald’s isn’t keeping the technology to itself. Though when the deal closes it will become the sole owner of New York-based Dynamic Yield, the personalization company will remain a stand-alone operation and will continue to serve its current clients as well as work to attract new ones. It seems unlikely, however, that it would work with any direct competitors. While Dynamic Yield currently lists a number of brick-and-mortar players among its customers — including Forever 21, Ikea and Urban Outfitters — none are in the restaurant business.
Additionally, McDonald’s pledges to continue investing to build the core technology and develop the staff.
“…With the support of McDonald’s, our growth and efforts in product development, partner and customer support, as well as global presence will only further accelerate,” wrote CEO Liad Agmon in a post on the Dynamic Yield site.
Why you should care. If you’re one of Dynamic Yield’s 300 customers, you should know that the company will continue to serve you. But, more broadly, the deal represents a milestone in the way digital personalization and optimization are being utilized in real-world applications. If it works to increase average order size — and the fact that the technology was tested in the U.S. last year would suggest that it does — this development may raise the bar for the quick-service restaurant category and brick-and-mortar operations more generally.
Specific terms of the deal weren’t disclosed. Presumably, McDonald’s shareholders will need to approve of the acquisition before it becomes final, though the companies didn’t release a timeline.
Here’s the video McDonald’s made to convince shareholders of the wisdom of its purchase:
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