McDonald's Supersized Approach to Digital Transformation

Successful digital transformation isn’t a destination. It’s a never-ending rollercoaster [and that’s a good thing].

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McDonald's has never been one to shy away from innovation. From developing the first real drive thru window to being a pioneer of outsourcing, McDonald's has existed on the bleeding edge of its industry for decades. While for much of the 20th century that meant formulating new food products and pursuing operational excellence, now it means embracing artificial intelligence (AI), advanced analytics and digital transformation

According to Accenture, McDonald's is one of 8% of companies who have boldly and successfully pursued innovation. As a result these “leading companies” have grown revenue at more than 2x the rate of those in the bottom 25% of the study group. In addition, despite wide-spread lockdowns and forced restaurant closures around the world due to the Coronavirus outbreak, revenue and growth have remained steady for the global franchise

McDonald's resilience in the face of crisis can be largely attributed to its extensive investments in digital technology and massive culture transformation over the past 7 years. 


Digital Transformation from the Top Down

In 2017, McDonald’s CEO at the time, Steve Easterbrook laid out its long-term vision for digital transformation. Dubbed the “Velocity Growth Plan,” the strategy was built around 3 pillars:

  • Customer retention or “retain”
  • “Regain,” recruiting lost customers
  • “convert,” attracting new customers

Though Esterbrook exited McDonald’s in 2020, its new CEO, Chris Kempczinski, recently reiterated its commitment to digital transformation. “There’s no question that digital is transforming global retail. Across the system, there is great excitement about the role it will play in transforming McDonald’s by strengthening and deepening relationships with our customers. So we know there’s great potential with digital, but there’s also a lot of hard work to do to realize our ambitions.”


Meet McDonald’s Digital Innovation Team

Since its inception in 2014, McDonald’s Digital Innovation Team has grown from 3 members to 130+. The teams main focus? To evolve the customer experience in 3 ways:

  • To “unbundle the restaurant experience”
  • Develop the next generation of friction-less drive-thrus
  • Deliver food anywhere any time

For example, the team has recently been experimenting with automated drive-thrus. Using AI voice attendants to take orders instead of human workers has enabled them to reduce wait times by almost a minute even as drive-thru numbers surged as indoor dining became taboo amidst the pandemic. In the past 2 years, it also piloted AI-powered devices that scan license plates (with customers' permission) to predict orders and a variety of touchscreen kiosks.


Ongoing Digital Transformation Challenges

Even behemoths such as McDonald’s are not immune to failure. In 2019, Mcdonald’s invested upwards of $300 million into Dynamic Yield, an AI company that, essentially, uses predictive analytics to deliver personalized customer experiences on factors such as purchase history, weather, time of day and more to create customized offerings.

Fast forward to February 2021 and, as Dynamix Yield did not deliver the boost in sales it expected, McDonald’s reveals it is looking to partially divest from the company. 

As a spokesperson from McDonald’s commented to RestaurantDive, "A key focus of our growth plan, Accelerating the Arches, is building on our digital presence to bring fast, easy and more personalized experiences for our customers. The implementation of Dynamic Yield technology is enhancing the customer experience at McDonald's Drive Thrus and kiosks in a number of markets around the world and we're continuing to deploy to more.” In other words, while the drive-thru technology worked out well, the suggestive selling technology did not live up to its promise. 

This instance is just one example of an ongoing challenge McDonald’s and many other franchises face: no matter how many great ideas the business visionaries and “mad scientists” at McDonald’s HQ come up with, if they can’t convince franchise owners to adopt and pay for this new technology, its days as titan of the food industry will be numbered. 


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