The Big Mac of Big Data
While many associate big data with huge technology companies like Apple and Microsoft, McDonald’s has begun to use data to create meaningful insights and leverage themselves against their rising competition.
McDonald’s, the world’s most successful and extensive fast-food chain, is a recognizable brand name nearly everywhere and has even become a cultural symbol for the fast and easy way of life in America. It remains a presence in pop culture and continues to dominate the market, earning 19 billion dollars more in 2020 than its closest rival, Starbucks (Lock, 1). The 82-year old company runs more than 34,000 local restaurants, they serve nearly 70 million people in 118 different countries every single day, and in the United States alone Americans eat more than 1 billion pounds of beef at McDonalds (5.5 million cattle) (Barrett, 2). With the help of the Israeli-based decision logic tech company, people may soon think of Big Data over Big Mac’s when considering this fast-food giant.
Brand value of the 10 most valuable quick service restaurant brands worldwide in 2021, listed in billions [Statista]
The enhanced drive-thru experience allows the fast-food chain to predict when large groups show up and palace large orders. This prediction ensures there are employees appropriately staffed to create a positive experience for customers. The launch of the McDonad’s app allows the company to gain access to customer intelligence that then allows them to tailor offers specifically to customers and encourage repeated orders, visits thereby increasing sales. Finally, digital menus have been optimized to change options displayed on the menus based on weather, time of day, events in the local area and product availability. Menus can change to promote products that cater to these particular needs. Finally, at some drive-throughs, McDonald’s has incorporated license-plate readers to allow the company to customize suggested purchases based on previous order experiences. They also will incorporate geofencing, technology that allows a store to know when a mobile app customer is near that then allows employees to prepare that customer’s order. The contribution of all these areas has given McDonald’s an average 5.5% rise in store sales in 2021 despite declines in the spring of 2020.
Furthermore, the AI is helping the restaurant chain better manage their inventory and avoid running out of products. The AI platform can promote or withdraw items based on stock levels and allow them to bring together their supply and demand level. For instance, if they are low on chicken nuggets but have a lot of beef, they can have their menus promote beef-based items (Barrett, 2). Dynamics is helping the company move from mass marketing to mass personalization by unlocking data within the customer experience and making predictions around customer behavior and relaying that information back to the supply chain. The real-time data provided by Dynamics allows McDonalds to maximize their profits and satisfy customer needs while also taking into consideration the stock available in each individual restaurant.
McDonald’s evolution into an information-centric company driven by data has allowed them to create actionable outcomes saving them time and money. They went through the data at every store and created data visualizations that gave them comparable insights across their branches giving them a fuller view of their customer. As a result, they had a consolidated revenue of $21.1 billion and $100 billion in Systemwide sales, their highest growth in over a decade.
As McDonald’s looks to the future, they want to continue building out their digital presence to help create a fast, easy and personalized experience for customers. Dynamic Yield’s technology has allowed them to use their data to research and test out new approaches to adapt to the needs of customers. They also plan on selling part of Dynamic Yield to Mastercard as a way to generate a return on its $300 million investment as other competitors have installed the same type of technology. This will allow the technology McDonald’s has used to scale to third-party businesses.
Alcántara, A.-M. (2019, June 3). McDonald’s is investing in digital with apps, kiosk ordering and Data Insights. Adweek. Retrieved March 25, 2022. https://www.adweek.com/commerce/mcdonalds-is-investing-in-digital-with-apps-kiosk-ordering-and-data-insights/
Barrett, B. (2019, March 25). McDonald’s acquires machine-learning startup dynamic yield for $300 million. Wired. Retrieved March 25, 2022. https://www.wired.com/story/mcdonalds-big-data-dynamic-yield-acquisition/
Lock, S. (2021, September 14). Fast Food Industry Market Share Worldwide, by brand 2019. Statista. Retrieved March 25, 2022. https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-worldwide/#:~:text=McDonald%27s%20is%20still%20the%20leading,than%20its%20closest%20rival%2C%20Starbucks.
Thomas, L. (2021, December 21). McDonald’s is selling digital tech startup dynamic yield to MasterCard. CNBC. Retrieved March 25, 2022. https://www.cnbc.com/2021/12/21/mcdonalds-to-sell-digital-tech-startup-dynamic-yield-to-mastercard-.html
(2018, April 16). How does McDonalds use big data? Medium. Retrieved March 25, 2022. https://medium.com/@Orcanintell/how-does-mcdonalds-use-big-data-439403bc3fee
How bi and Big Data is essential to McDonald’s Growth Strategy. YourShortList (Formerly Software Advisory Service). (2021, December 15). Retrieved March 25, 2022. https://yourshortlist.com/how-bi-and-big-data-is-essential-to-mcdonald-s-growth-strategy/
Student comments on The Big Mac of Big Data
A great case of a legacy company adapting in order to remain competitive and agile (especially with healthy food trends). I wonder what your thoughts are on how they might use this technology based on app adoption rates and third-party delivery platforms? For example, how might this AI be used or leveraged when someone is ordering through Uber Eats? Are they losing opportunities for data mining or integration as a result? Additionally, I wonder how they will continue to incentivize customers to use their native platform. For example, I have heard about specific products only being offered when you order through their app (such as the szechuan sauce). Could this be how they retain loyalty to their app? Could these AI capabilities expand and even help link a profile to a car license plate in the future (with consent given)? Lots to consider with the company tackling the space. Thanks for sharing, Stephen!
Thanks for this very interesting post, Stephen! Steering demand by promoting specific items depending on supply level at the stores really illustrates the value of having all your systems and data sources integrated and connected. I do wonder if we will end up seeing some customer attrition now that almost every store and chain on the planet has a corresponding app. I personally cannot see an endgame where customer have 10, 20 or even 30 brand-specific apps installed on their phone at the same time and let themselves be bombarded by the daily pop-ups that attempt to sell them something.
Stephen, what a great post! Thanks for sharing. I haven’t thought much about fast food chains might utilize data analytics to create more value for customers, this is a great example, as Heili said, of a legacy company utilizing data analytics to stay competitive.
I wonder what competitors like Wendys, Burger King, and Subway are doing? I will be interesting to see if similar companies begin leveraging AI to create more value for customers.
Thanks for the enjoyable and thought provoking piece, Stephen!