McDonald’s (MCD) is Mc-mastering the integration of artificial intelligence in its all-important drive-thru.
And investors should welcome the tech infusion.
Within the past six months, the Golden Arches has snapped up two tech startups that will help effectively make the McDonald’s menu board a giant Amazon Alexa-like device. McDonald’s said Tuesday it agreed to acquire early stage voiced-based tech company Apprente. The tech startup’s technology means consumers will eventually speak to a machine, rather than a human, when ordering at a McDonald’s drive-thru.
In late March McDonald’s acquired Dynamic Yield. The technology creates suggested items for the drive-thru menu board based on time of day, weather, current restaurant traffic and trending orders. McDonald’s plans to have the technology up and running at all 14,000 plus U.S.-locations and Australia by year end.
The tech acquisitions are very logical, say pros Yahoo Finance have talked up.
The McDonald’s drive-thru represents a commanding 70% of its overall business. It’s becoming an increasingly important sales driver as ever hurried people detest getting out of their cars to pick up food. So, the drive-thru ordering process has to be on point, or else McDonald’s risks returning to its dark days of weak store traffic.
“It makes sense, it should help reduce the bottlenecks at the point of ordering,” veteran restaurant analyst Peter Saleh of BTIG tells Yahoo Finance, referring to the Apprente purchase. Saleh says it should bolster consumer perception on the McDonald’s dining experience. And with that, comes the potential to drive increased visits to the restaurant giant.
Meanwhile, tech out of Dynamic Yield should assist in lifting the average amount each consumer buys per visit, Saleh thinks.
Keeping ahead of rivals
Above all else, McDonald’s outright acquisitions of these tech outfits gives it a competitive advantage relative to others in the fast-food space. McDonald’s in effect now owns advanced technology competitors don’t, forcing them to either develop it themselves or find second-tier acquisitions — both costly and risky.
Saleh says McDonald’s strong financial position is allowing them to pull the trigger on these tech purchases.
Even without the drive-thru tech infusion, McDonald’s has shown progress this year on speeding up its often jam-packed drive-thru. The company has reduced the number of items on the menu and re-trained workers in an effort to get the average drive-thru time down to 30 seconds. It’s unclear if McDonald’s has hit that magic time yet, but it’s moving in that direction.
“We’re seeing drive-thru times dropping almost all of our major international markets, and notably here in the U.S. as well,” McDonald’s CEO Steve Easterbrook told analysts on the second quarter earnings call.
Tech will help do the rest.