McDonald's US$300m tech deal biggest in 20 years

Chicago

MCDONALD'S CORP, 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 US$300 million on Dynamic Yield Ltd, 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 menu 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," Mr Easterbrook said in a statement. He said McDonald's is expanding the role that technology will play in McDonald'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 tested Dynamic Yield's technology in the US in 2018, and will more widely introduce it this year for drive-through menus once the deal closes.

The company also plans to expand the capability to markets abroad. This is the largest deal for the Chicago-based chain in about 20 years, when it became an investor in Chipotle Mexican Grill Inc. It has since divested its stake in the burrito chain.

With the agreement, McDonald's becomes the sole owner of Dynamic Yield, which is based in New York and Tel Aviv. The 38,000-store burger chain will continue to invest in Dynamic Yield, which will remain a standalone company. Dynamic Yield's website says customers have included Urban Outfitters Inc, Ikea and HelloFresh.

The deal comes as the world's biggest fast-food chain is still struggling in its home market, where it faces fierce competition from rival chains that have also been upping their games with promotional offers and increased investments in digital and delivery services.

"With this acquisition, we're expanding both our ability to 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," Mr Easterbrook said in a statement.

The company said it would roll out the technology at restaurants in the United States in 2019 and then expand the use to other top international markets. BLOOMBERG/REUTERS