McDonald’s buys $300m tech firm to personalise menus

McDonald’s is acquiring a decision-logic technology company to better personalise menus as part of its digital push. The fast-food giant is understood to be spending more than $300m (€266m) on Dynamic Yield — its largest acquisition in 20 years.

With the new technology, McDonald’s restaurants can vary their electronic menu boards’ display of items, depending on factors such as the weather — more coffee on cold days and McFlurries on hot days, for example — and the time of day or regional preferences. The menus will also suggest add-on items to customers.

Since taking the helm in 2015, McDonald’s chief executive Steve Easterbrook has pushed technology — including self-order kiosks, digital menus boards and delivery — to boost sales and help McDonald’s stand out among rivals.

Since McDonald’s seldom carries out acquisitions, the purchase of Dynamic Yield shows the company’s desire to leverage technology to speed growth in the fiercely competitive restaurant industry.

“Technology is a critical element of our velocity growth plan,” said Mr Easterbrook.

He said McDonald’s is expanding the role that technology will play in the company’s future “and the speed with which we’ll be able to implement our vision of creating more personalised experiences for our customers.”

McDonald’s tested Dynamic Yield’s technology in the US in 2018, and will more widely introduce it this year for drive-thru menus once the deal closes. The company also plans to expand the capability to markets abroad. This is the largest deal for the Chicago-based chain in about 20 years, when it became an investor in Chipotle Mexican Grill. It has since divested its stake in the burrito chain.

With the agreement, McDonald’s becomes the sole owner of Dynamic Yield, which is based in New York and Tel Aviv. The 38,000-store burger chain will continue to invest in Dynamic Yield, which will remain a standalone company. McDonald’s shares rose as much as 1.7% to a two-month high. The stock has gained almost 6% this year.

“As McDonald’s moves aggressively to steal quick-service restaurant market share in the US 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,” said Bloomberg Intelligence restaurant analyst Michael Halen.

Bloomberg

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