McDonald's is turning to artificial intelligence to get you to spend more in the drive-thru

By Alexia Elejalde-Ruiz

About 70 percent of fast food transactions happen at the drive-thru, Ashbrook said, and this is the first major innovation a chain has undertaken to improve that experience.

McDonald’s digital drive-thru menus will soon recommend items to customers based on the weather, time of day and how busy the store is at the moment, part of a big investment in artificial intelligence to create a more personalized experience and encourage larger purchases.


Chicago-based McDonald’s announced Monday that it plans to acquire Dynamic Yield, a company based in New York and Tel Aviv that specializes in decision logic technology. The $300 million acquisition is McDonald's largest in 20 years.


With the deal, McDonald’s has upped the ante in its push to use technology to drive sales. While it and other fast food chains have introduced self-service kiosks, digital menu screens, mobile ordering apps and delivery, McDonald’s is on the leading edge of using artificial intelligence to customize the ordering experience in restaurants, experts said.


“This has the potential to be a game changer,” said Linda Ashbrook, director of customer solutions and innovation at Datassential, a food industry market research firm.


McDonald’s tested Dynamic Yield’s technology in several of its restaurants last year and will roll it out to drive-thrus across the country this year, then in international markets. It also plans to integrate the technology into its mobile ordering app and the self-service kiosks inside stores.


For customers, that might mean menus will highlight soft serve ice cream on a hot day and a McCafe on a cold day, in addition to items that pair well with whatever the customer just ordered. The software will also track wait times at the restaurant so that, during busy periods, the menu suggests items that are easier for staff to make, allowing the drive-thru to run smoother.


Drive-thru wait times have increased for about the last five years, CEO Steve Easterbrook said during the company’s last earnings call, and the company has been looking at ways to halt that trend.


As of October, McDonald’s had a drive-thru wait time of almost five minutes, the worst among the 10 largest chains, according to QSR Magazine. Burger King, with a wait time of a little more than three minutes, was the best.


About 70 percent of fast food transactions happen at the drive-thru, Ashbrook said, and this is the first major innovation a chain has undertaken to improve that experience.


“It has the potential to have an impact on brand loyalty and brand love,” she said.


The technology follows the lead of retailers like Amazon and Walmart that use mounds of data collected on their e-commerce sites to suggest items shoppers might want to buy, and such suggestive selling has been shown to increase sales, Ashbrook said.


McDonald’s says it will be among the first to bring the technology to its physical stores.


“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,” Easterbrook said in a news release.


McDonald’s, which reported $21 billion in revenues last year, doesn’t often make acquisitions. Its most recent major purchases were stakes in Chipotle and Boston Market in the late 1990s, both of which it has since shed.


Buying Dynamic Yield allows McDonald’s to control how the technology is used and enhance it for their specific needs, said Chris Stafford, senior manager in the mergers and acquisitions practice at Chicago consulting firm West Monroe Partners.


“These types of digital innovations can help McDonald’s bring its capabilities to market much faster than investing millions internally in (research and development) and requiring two to three years to roll out,” Stafford said.


Dynamic Yield will continue to operate as a standalone company and serve other clients. Founded in 2011, its clients include Urban Outfitters, Sephora and Ikea, according to its website.


In a video released by McDonald’s with the announcement, Easterbrook said: “When you serve 68 million customers every day, our ability to learn about our customers and play that back through this technology is unbeatable, it gives us a huge competitive advantage.”