Strategy: Technology and Innovation at McDonald’s

Strategy: Technology and Innovation at McDonald’s

Fast-food restaurants have embraced technology as part of their respective business strategies. McDonald’s Corporation is a prime example. It has invested in pursuits aimed at building its technological capabilities to capitalize on the benefits of innovation across its value chain and maximize further its earning potential. Technology and innovation have become part of its business strategy and its source of competitive advantage.

How McDonald’s Uses Technology and Innovation to Add Further Value to Its Business By Improving Its Operations and Elevating the Customer Experience

The company has a dedicated Global Technology department that works under the Global Chief Information Officer or CIO and alongside other critical departments and executive heads such as the Senior Executive VP for Strategic Initiatives, the Global Chief Impact Officer, the Chief Financial Officer, and the Chief Data Analytics Officers, among others

Note that the CIO is responsible for managing the entire technology portfolio and partnerships of McDonald’s with the main purpose of transforming customer and employee experiences, as well as accelerating business growth worldwide.

The Global Technology department is headquartered in the United States and it has been responsible for developing and deploying technology-based solutions and innovations geared toward supporting the companywide Accelerating the Arches growth strategy. The team under this department is behind some of the latest developments at McDonald’s stores.

It is worth mentioning that the company was behind numerous ventures that have been acquired by other companies such as McD Tech Labs which is involved in an AI-based automated ordering system and Dynamic Yield which is an AI-based marketing solution.

The department has since created numerous teams. For example, it incubated a digital information team in 2014 that deployed technologies for in-store dining, drive-thru service, and food deliveries. It assembled a digital customer engagement team in 2020 tasked to improve the different aspects of its digital services such as ordering and payments.

Improving Business Operations

Part of the technology strategy of McDonald’s is to use business intelligence and data analytics to solve problems in the different facets of its value chain and improve its business operations. Take note of the following pursuits and accomplishments:

• Addressing Employee Turnover: The company became infamous for its high employee turnover rate. The company has since partnered with companies such as Sprockets to utilize artificial intelligence in its selection and hiring process. It now has the capability to screen applicants and predict their long-term employment success based on 55 predefined needs, values, and personality traits.

• Supply Chain Management: It also uses AI and big data to optimize its supply chain. The company has integrated real-time operations, inventory systems, and supply chain processes using information systems and supplemented further by AI algorithms for a faster and more efficient replenishment of its inventories at individual stores and warehouses in consideration of demand and supply.

• Automation of Operations: The company has also implemented automation solutions using AI, big data analytics, and the internet of things or IoT to optimize further its operations. It has also invested heavily in reskilling staff and personnel that would be displaced by its push to automate certain areas of its business to place them in other areas that require unique human abilities.

Elevating the Customer Experience

The company has also leveraged its technological capabilities to supplement its marketing strategy, introduce new value-added services inside its stores, and expand its market reach through out-of-store services. Below are notable examples:

• Analytics for Better Loyalty Program: Restaurants use rewards and loyalty programs as part of their sales promotion strategy. The specific program of McDonald’s involves using data obtained from customers to analyze food orders and habits. These analyzed data are used to determine specialized deals that would attract more customers, push a particular product or promotions, and upsell, thus resulting in more sales while also giving customers rewards for their continuous patronage.

• Focus on Drive-Thru and Delivery Services: The coronavirus pandemic proved that drive-thru and food delivery services are critical to the survival of restaurant businesses. The company has been improving its drive-thru service and some of its stores are equipped with an AI-enabled voice system that automates order-taking. It has also developed its website and mobile application to maximize its sales from food deliveries or out-of-store dining experiences.

• Modernizing In-Store Customer Experience: It has also developed and deployed numerous solutions aimed at optimizing the operation of its stores. These include the placement of self-service kiosks that shorten queues and improve the dine-in experience while upselling other products, modernizing its point-of-sales to take into consideration modern payment solutions, and robots and other automated solutions to assist restaurant staff in food preparation and different facets of customer service.

• Personalization of Food Products and Services: The company continues to experiment with different technologies aimed at delivering personalized products and services. For example, in several testing stores, it has installed dynamic menu boards that use artificial intelligence to promote specific products based on the time of the day, weather, popularity of existing products, and foot traffic. Its mobile app also uses AI to provide suggested food items based on the profile of individual app users.

• Exploring the Benefits and Applications of the Metaverse: The metaverse is a virtual platform that provides a higher degree of interactivity among its users and within a digital environment. The company has filed patent applications indicating that it is developing so-called virtual restaurants that would exist in a particular metaverse platform. The applications have also revealed that it is planning to sell virtual items and is looking into issuing non-fungible tokens or NFTs within the metaverse.