Venture

McDonald’s Will Serve Artificial Intelligence With Latest $300M Acquisition

A customized menu that helps make decisions for you. Food and drink offerings depending on the day and weather. Suggestions on which drink or dessert pairs well with an entree.

We’re not talking about a high-brow restaurant, or even a robot-powered coffee bar. We’re talking about McDonald’s drive thrus.

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Yesterday, the fast food giant announced it will acquire Dynamic Yield, an artificial intelligence company based in New York and Tel Aviv, for $300 million.The acquisition will give McDonalds data on what purchases are most popular with consumers, and will offer a more “personal, customized” experience, it said.

Prior to being acquired, Dynamic Yield had $83.3 million in funding and $17.8 million in revenue, according to Crunchbase data. Its investors include Bessemer Venture Partners, Marker and Naver Corp. Its co-founder, Liad Agmon, is also the founder of Delver, an intelligent social search engine in Tel Aviv, Israel.

McDonald’s said it has tested this technology in several U.S. restaurants in 2018, and will continue the roll out in 2019. It is adding to a string of data-focused features in its service: an app, mobile order, digital menus and self-order kiosks.

While artificial intelligence and a Big Mac might seem like an unlikely pairing, Hans Taparia, a social entrepreneurship professor at New York University’s Stern School of Business, said the decision makes sense. For McDonald’s, at least.

“This is not signifying product innovation,” he told Crunchbase News, saying that the company is looking for tools to increase sales, but not change health of the offerings.

Taparia, who co-founded Tasty Bites, explained that as health trends continue to skew away from fast food, McDonald’s is under pressure to grow its top line. This acquisition will give the company data to increase sales at the point-of-purchase, so goal accomplished.

Unfortunately customers don’t regularly come to McDonald’s for healthy offerings, he said. So the data will tell McDonalds to push items like fries or burgers vs salads. From a business standpoint, he said it gives McDonald’s the green light to suggest more so-called junk food to customers but rationalized in a “subtle, scary way.”

From its end, McDonald’s is showing that it is taking some steps in both the healthier, and more innovative direction. In 2018, it promised fresh, real beef in all restaurants. That same year, it skimmed down its happy meal.

Steve Easterbrook, the CEO of McDonald’s, told Wired that the acquisition will let the company have real-time information to connect the kitchen to customer tastes. The “predictive analytics” he said could help cut down waste.

For its part, McDonald’s said the acquisition will help it address “ever-changing consumer trends” and provide “greater convenience” for customers.  

McDonald’s will likely draw some interesting information about customer behaviors and taste buds from this acquisition. But, as the AI bandwagon continues to super-size, whether or not data-focused innovation is critical for the life of the fast food giant will be revealed by time.

Illustration Credit: Li-Anne Dias