Power Players

McDonald's $300 million deal officially makes it the king of A.I. and fast food—here's why the move was pure genius

A McDonald's outlet in Taiwan

On Monday, McDonald's Corp. announced its plans to acquire Dynamic Yield Ltd., a decision-logic technology company, for more than $300 million, making it the company's largest acquisition in two decades.

McDonald's said a statement that it will be one of the first companies to integrate decision technology into the customer experience at physical store locations. By doing so, the fast food chain has deemed itself as a force to be reckoned with when it comes to A.I. and fast food.

The 'Big Mac' of A.I. and fast food

The race for massive digital disruption in restaurants, from fast food and casual dining to high-end eateries, is only going to get more intense, and McDonald's acquisition makes a strong statement about how far it's willing to go to win over customers.

"As McDonald's moves aggressively to steal quick-service restaurant market share in the U.S. and abroad, management aims to use its value menu, technology, discounts, simpler operations, delivery and menu changes to boost guest traffic for a second time in three years in 2019," restaurant analyst Michael Halen wrote in a report for Bloomberg Intelligence.

These billionaires have all the money in the world — and they still eat at McDonald's
These billionaires have all the money in the world — and they still eat at McDonald's

The company has recently struggled with growth in its U.S. market, but now it appears that A.I. will help the chain create "stickiness" among its customers and generate more value and volume.

The real benefit of incorporating an A.I.-driven technology platform is that it allows customers to engage with the restaurant however they want. Moreover, enhanced analytics could also help restaurants improve staffing for better service and improved efficiency.

Demand for delivery

A key area for McDonald's will be leveraging its new A.I. capabilities to expand in the rapidly growing segment of food delivery, which has become a necessity for restaurants that want to keep their existing customers.

Consumers today expect to get food from their favorite restaurants in a number of ways, including ordering ahead and delivery to home and office. With the power of A.I. on its mobile app, McDonald's could see bigger orders, increased demand for delivery, and greater margin.

"Technology is a critical element of our Velocity Growth Plan," McDonald's CEO Steve Easterbrook said in a statement. The only question that remains is, how many jobs will be lost due to the advanced technology?

Joel Shapiro is a clinical associate professor at the Kellogg School of Management at Northwestern University and an academic director of Executive Education. He holds a PhD in policy analysis from the Pardee RAND Graduate School in Santa Monica, CA. Follow him on LinkedIn here.

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