McDonald’s Commits to Self-Order Strategy, Digital Transformation

After months of hints – and a year of testing in the UK, Australia, and Canada – McDonald’s has announced its intention to bring mobile and self-service technology to all of its United States locations.

Why this massive tech adoption? And how will it affect the restaurant industry?

Take a look at what the fast-food goliath’s strategy means for its customers, for its franchisees, and for other limited-service brands, large and small.

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Building A Digital Customer Experience

To ramp up the “commitment to putting customers at the heart of everything” they do, McDonald’s CEO Steve Easterbrook laid out plans to modernize all 14,000 McDonald’s USA restaurants with digital self-order kiosks, mobile ordering, “smart” menu boards, and table service.

The considerable investment in self-service technology signals a shift in strategy for McDonald’s. Easterbrook aims to reinvigorate the brand after it spent decades committed to the analog. By introducing mobile ordering and infusing the in-store experience with the digital, McDonald’s will soon have created a seamless digital customer experience – one they hope will win back the loyalty of those led astray by competitors.

On a tactical level, with self-order technology customers will be able to order ahead of time, easily customize their meals, and skip the line. This will cut down on customers’ wait time and will also simplify operations for the kitchen. As quoted in The Street, Easterbrook pointed out that kiosk ordering “takes the stress away from the front counter, and therefore you divide some of the pressure during the busiest times. […] From a commercial perspective, we see higher average checks because customers can browse the menu for a little bit longer, feel a little less pressure, and they just tend to spend more.”

McDonald’s executives are confident that this one-on-one customer technology will boost profitability for franchisees and more than justify the initial capital expenditure. McDonald’s has seen significant returns in the UK, Australia, and Canada; one UK executive reported 8% sales growth in downtown London as a result of the technology.

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The Rise of Self-Order Technology

The new emphasis on self-service technology also helps McDonald’s to compete with early tech adopters like Domino’s, Starbucks, Panera, Wendy’s, Which Wich, and Subway.

Panera, for example, began testing kiosks in 2012 and expects all 2,000 locations to roll out the “Panera 2.0” concept with “Fast Lane Kiosks” in the next few years. Blaine Hurst, executive vice president and chief transformation and growth officer at Panera, remarked how customers who used the kiosks come back to the restaurant more often (by a significant margin).

Earlier this year, Wendy’s also announced widespread adoption of self-order and mobile technology in an effort to mitigate the rising cost of labor.

With McDonald’s now aboard the self-service train, a standard has likely been set for all limited-service restaurants. Many executives have named self-order technology in their long-term strategies, and now, they are likely to move it up on their list of priorities.

McDonald’s developed the self-order kiosks in-house, and as a result, they come with a relatively high price tag. Franchisees are expected to invest about $60,000 in order to install them. The kiosks debuted in the European market earlier this year.

Five hundred restaurants in Florida, New York and Southern California were the first to adopt the new technology in the US, with San Francisco, Boston, Chicago and Seattle to follow in the new year. By the second half of 2017, we can expect mobile ordering to be available nationwide.

 

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