McDonald’s largest acquisition in 20 years: Why it is buying this tech company for $300 million

By: |
Published: March 26, 2019 7:15:34 PM

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.

McDonald’s largest acquisition in 20 years: Why it is buying this tech company for 0 million

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

The world’s biggest restaurant chain is spending more than $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 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 personalized experiences for our customers.”

Read Also| Jet Airways assures govt won’t ground any more planes; will add 40 more by April end

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.”

McDonald’s tested Dynamic Yield’s technology in the U.S. in 2018, and will more widely introduce it this year for drive-thru 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.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Byju’s, Swiggy, OLX backer Naspers eyes Euronext listing for international internet businesses
2Rise and fall of Jet Airways: How Naresh Goyal’s number one airline came close to bankruptcy
3Uber confirms Careem buy, to pay $3.1 billion for Dubai-based ride-hailing rival