Companies in virtually every industry are being challenged to implement digital transformations of one kind or another. Even industries that years ago would have seemed unlikely candidates for digital disruption are undergoing major changes as a result of the internet and new technologies.
The stodgy old restaurant business is no exception.
Thanks to the skyrocketing popularity of food delivery services like Uber Eats and Deliveroo, many restaurants are making changes to their operations to better serve customers who never set foot in their establishments. There are even a growing number of restaurant startups. Some are so-called virtual restaurants that serve customers exclusively via these delivery apps. Others are tech-centric operators building “food platforms”.
Digital disruption isn’t just affecting mom-and-pop restaurants and creating opportunities for a new generation of digitally-savvy restaurateurs. In a growing number of cases, it is driving fundamental change at some of the biggest restaurant brands.
Domino’s Pizza CEO Patrick Doyle describes his company as a tech company that happens to sell pizza. Last year, Doyle’s biggest competitor, Pizza Hut, acquired QuikOrder, an online ordering software provider, in what was reportedly one of the chain’s largest acquisitions ever.
Pizza Hut isn’t the only tech company investing lots of money in technology. One of the most recognizable global restaurant brands, McDonald’s, recently acquired Dynamic Yield, a personalisation and decision logic technology vendor which offers a platform “that delivers individualized experiences at every customer touchpoint: web, apps, email, kiosks, IoT, and call centers.”
According to McDonald’s CEO, the purchase of Dynamic Yield will help the global fast food giant “increase the role technology and data will play in our future and the speed with which we’ll be able to implement our vision of creating more personalised experiences for our customers.”
What will that actually look like? Initially, McDonald’s plans to use Dynamic Yield’s technology to personalise what it shows customers on its stores’ outdoor digital drive-thru menu displays. Specifically, the items presented to drive-thru customers will be personalised based on a number of factors including the time of day, weather, current restaurant traffic, trending menu items, and menu items a customer has already selected. The company says that its use of Dynamic Yield’s technology in this fashion “will enable McDonald’s to be one of the first companies to integrate decision technology into the customer point of sale at a brick and mortar location.” It will first deploy drive-thru personalisation in the US and later in key international markets. It also plans to integrate it into its self-order kiosks and the McDonald’s mobile app.
McDonald’s first tested Dynamic Yield’s technology in 2018 and the price it is reportedly paying for the company — $300m — suggests that it liked the results. Interestingly, McDonald’s has indicated that Dynamic Yield will operate as an independent business and continue to serve its existing clients and seek out new clients.
In other words, McDonald’s isn’t just buying Dynamic Yield for its technology; instead it will also be the proud owner of a software-as-a-service business.
What’s on the menu: more tech investment
According to the National Restaurant Association’s 2019 State of the Restaurant Industry Report, over 80% of restaurant operators plan to invest in technology this year believing that it can provide competitive advantages.
When the McDonald’s acquisition of Dynamic Yield is considered alongside other examples such as Yum Brands’ $200m 2018 investment in food delivery platform GrubHub to Starbucks’ investment in automation tech firm Brightloom (formerly eatsa) in July, it’s clear that major brands are willing to open their wallets to bolster their homegrown digital transformation efforts.
With this in mind, expect restaurant brands to become even more active on the partnership, investment and acquisition front in connection with companies that offer technology solutions related to ordering and payments, data and analytics, personalisation.