According to sources familiar with the matter, McDonald’s is planning to spend approximately $300 million in purchasing artificial intelligence (AI) firm Dynamic Yield Ltd.
This will mark the company’s biggest acquisition in two decades, which is aimed at better personalizing McDonald’s menus in its recent increased digital push.
By leveraging the new technology from Dynamic Yield, all McDonald’s restaurants will feature a different display of items on their electronic menu boards, which will be determined by various factors including the weather, regional preferences, or time of day.
The electronic menu boards will also recommend add-on items to users or customers.
McDonald’s, which caters to 68 million customers every day in approximately 38,000 outlets, intends to introduce the technology at all its drive-through spots in the United States in 2019 before expanding to its abroad locations.
The company, which is headquartered in Chicago, hopes to roll out the technology on mobile phones and inside its restaurants.
Since taking over as the company’s chief executive officer back in 2015, Steve Easterbrook has shown considerable focus on technology, primarily through the establishment of self-order kiosks as well as digital delivery and menu boards.
This effort not only aids McDonald’s in standing out amongst its rivals but also in increasing its sales.
Since McDonald’s rarely conducts acquisitions, the purchasing of Dynamic Yield demonstrates the company’s interest in taking advantage of technology to expedite its growth in the intensely competitive restaurant business.
“Technology is a critical element of our velocity growth plan,” Easterbrook said in a statement. He claimed McDonald’s is expanding technology’s role in the future of the company “and the speed with which we’ll be able to implement our vision of creating more personalized experiences for our customers.”
Recently, McDonald’s share price increased by 1.7% to $188.88.
On the other hand, the stock has risen by nearly 6% in 2019.
David Tarantino, an analyst at Baird, claimed that he sees “strategic value” in the deal, especially as McDonald’s tries to accelerate its growth and “elevate the customer experience.” He said the deal could be “slightly dilutive in the early stages.”
The global restaurant chain tested the technology from Dynamic Yield in the United States last year and is expected to extensively roll it out in 2019, specifically for drive-thru menus after closing the deal.
With the agreement between the two companies, McDonald will become the owner of Dynamic Yield, a company located in Tel Aviv and New York.
The restaurant chain is expected to continue investing in Dynamic Yield, which will operate independently. “We’re thrilled to be joining an iconic global brand,” said Co-founder Liad Agmon.
According to Dynamic Yield, it has several leading brands as part of its customers, including online supermarket Ocado, Tottenham Hotspur football club, and furniture retail giant Ikea.
Although small in the context of the restaurant chain, which enjoys a market capitalization of nearly $142 billion, the acquisition is McDonald’s largest in 20 years.
The purchase also has strategic significance as McDonald’s increases its focus on big data to attain a competitive edge over its rivals in the fast-food space.