McDonald’s have recently bought an Israeli start-up company called Dynamic Yield. The artificial intelligence (AI) technology that they’ve developed will help the fast food chain to give customers “a much more personalised experience.” It’s a reasonable assumption that they predict the incorporation of the technology into their systems will produce a very dynamic yield, as the company cost McDonald’s a supersized £227m.
What does the new AI technology actually do?
This AI technology is called ‘decision logic technology’ and it is the type of algorithm that we’re already familiar with. It’s the retailers’ tool that brings us: ‘if you like that, you’ll also like this’ and ‘other customers who bought that, also bought this’. It uses customers’ previous decisions to predict next purchases and suggest additional items.
It means that McDonald’s can become increasingly more sophisticated and reactive with its menu offering to customers. The aim is that the AI technology will be able to combine all its stored data with real time information such as traffic, weather, time of day and any local events. It will also be able to account for the impact on the staff. For example, showing those meals that have a speedier prep time when it’s a busy time of day.
So, when you roll up to the drive through menu, its already taken all these elements into consideration. When its exceptionally warm for a spring day in the Midlands, you’ll be offered a McFlurry to go with your Big Mac Meal…let’s face it, it probably is what you fancy.
Why is this good for McDonald’s?
As reported by Wired, Steve Easterbrook, McDonald’s CEO, said: “We’re a really straightforward business. People only come to us if they want something to eat, or something to drink. We’re not in the business of using technology to try to change people’s lives…We’ve never had an issue in this business with a lack of data. It’s drawing the insight and the intelligence out of it.”
“What we hadn’t done is begun to connect the technology together, and get the various pieces talking to each other. How do you transition from mass marketing to mass personalization? To do that, you’ve really got to unlock the data within that ecosystem in a way that’s useful to a customer.”
Obviously, driving sales is McDonald’s main aim. They recognise that they have access to a mass of customer data and are now investing in the best way to use it within their systems and to improve the customer experience.
Actually buying Dynamic Yield is a firm acknowledgement that continued R&D is required to keep McDonald’s nimble on this fast-paced tech journey. As their executive vice president and global chief information officer, David Henry, said: “It’s probably less about the product and more about the data scientists that come with it, the people that come with it, and their ability to move quickly with us.”
How will McDonald’s use the technology in the future?
Easterbrook already sees the future potential of this technology, which could have a very positive effect on reducing waste. “Ultimately you can see we’ll be able to use predictive analytics—we’re going to have real-time information, as we start to connect the kitchen together—further back through our supply chain. I’m sure that will happen. That isn’t part of this particular technology, but as you start to link the predictive nature of customer demand all the way through your stock levels in the restaurant and the kitchen, you can almost flex it back down through the supply chain.”
There are also a diverse range of options for development regarding the customer experience, if they are willing to share more of their data. For example, a favourites list linked to your car registration could speed up the ordering process, as your order starts being processed before you even reach the kiosk. This does lead the company down the road of privacy protection and Easterbrook acknowledges that, not only will this take time, they will need to prove its value to customers.
“If customers are willing to identify themselves—there’s all sorts of ways you can do that—we can be even more useful to them, because now we call up their favourites. We will be very sensitive as we learn, as we go forward. I think over time it’s going to be important to demonstrate that we can offer value back for customers willing to open themselves up to us.”
How quickly will we see the changes?
With 14,000 restaurants in the USA alone, the application of their newly acquired technology is going to be done in a “focused” way. They are trialling only 1,000 restaurants in the coming month. Most of their 68million daily customers visit via the drive through, so it will be interesting to see how AI technology impacts on that system.
The whole idea of McDonald’s making this much investment in AI is definitely one to watch. Where giants like McDonald’s lead, others will be watching, learning and eventually follow. If your company is involved in decision logic technology development, make sure that you apply for your R&D tax relief. It’s a substantial amount to invest back into your business’s future. You can use our free R&D tax relief guides and faq’s to work out if your company can apply for past and future projects.