McDonald’s purchases AI startup for $300 million

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McDonald's buys AI company

On March 23, it was announced McDonald’s agreed to purchase Dynamic Yield for a reported $300 million. Based in New York, the startup utilizes artificial intelligence (AI) tools to generate highly targeted purchase recommendations. Essentially, the firm works to create Amazon-style point-of-sale suggestions for its clients.

Last year, McDonald’s hired Dynamic Yield to revamp the drive-thru menus at some of its locations. The tech firm used local traffic data, weather information, and sales analytics to create specialized add-ons for dine out customers.

The company’s deep learning program is also sophisticated enough to make up suggestions as customers make their orders.

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Apparently, the regional test run was a big success as McDonald’s is acquiring Dynamic Yield to bring it smart menus to all of its U.S. restaurants. The fast-food titan also plans on using its new subsidiary’s tools in its self-service kiosks and mobile application.

McDonald’s purchase of Dynamic Yield is its biggest acquisition since buying buffet chain Boston Market for $173.5 million in 1999.

Did Somebody Say McUpgrade?

McDonald’s large investment in AI-optimization is part of a larger initiative to bolster profitability.

In 2017, the corporation unveiled a multipronged strategy to increase its dwindling market share by improving the quality of its offerings and customer satisfaction. To achieve those goals, the company announced plans offer delivery service, mobile ordering, and curbside service.

Founded in 2011, Dynamic Yield has provided “personalization at scale” sales services to IKEA, Hello Fresh, and Urban Outfitters. Notably, the firm will continue working with other clients despite its acquisition by McDonald’s.

Before striking its reported $300 million purchase agreement with the fast-food concern, Dynamic Yield received $83.3 million in investments from the likes of Deutsche Telekom and the New York Times.

The Fast Food-AI Revolution

McDonald’s is the biggest fast-food chain to utilize AI tools in its operations, but it’s not the first. In 2016, KFC opened a concept restaurant called Original+ in Shanghai. Notably, Original+ was staffed by a robot called Dumi that could take orders and prepare meals.

Similarly, Dominos began using autonomous drones to deliver pizzas in New Zealand in 2016. Moreover, the global pizza franchise is now using small autonomous vehicles to bring food to customers in Germany, the Netherlands, and Australia.

Lastly, Greg Creed, CEO of Taco Bell, KFC, and Pizza Hut owner Yum Brands said he expects most food service industry jobs to be replaced by robots by 2027.

As the fast food industry’s labor costs continue to rise and autonomous service solutions become more sophisticated and affordable, Creed’s prediction seems prescient.