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McDonald's $300m tech deal is its largest in 20 years

Mar 27 2019 07:31
Leslie Patton, Bloomberg

McDonald’s, in its largest acquisition in 20 years, is buying a decision-logic technology company to better personalise menus in its digital push.

The world’s biggest restaurant chain is spending more than $300m on Dynamic Yield, according to a person familiar with the matter. With the new technology, McDonald’s restaurants can vary their electronic menu boards’ display of items, depending on factors such as the weather - more coffee on cold days and McFlurries on hot days, for example - and the time of day or regional preferences. The menus will also suggest add-on items to customers.

Since taking the helm in 2015, chief executive officer Steve Easterbrook has pushed technology - including self-order kiosks, digital menus boards and delivery - to boost sales and help McDonald’s stand out among rivals. Since McDonald’s seldom carries out acquisitions, the purchase of Dynamic Yield shows the company’s desire to leverage technology to speed growth in the fiercely competitive restaurant industry.

"Technology is a critical element of our velocity growth plan," Easterbrook said in a statement. He said McDonald’s is expanding the role that technology will play in the company’s future "and the speed with which we’ll be able to implement our vision of creating more personalised experiences for our customers".

McDonald’s shares rose as much as 1.7% to $188.88, the highest in two months, on Tuesday. The stock has gained almost 6% this year - about half of the S&P 500’s advance.

Baird analyst David Tarantino said 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".

mcdonalds  |  ict  |  companies
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