McDonald’s history of innovation and automation of internal processes

Innovation probably isn’t the first thing that comes to mind when you think of McDonald’s. Although the company ceased its activities in Russia in May 2022, it continues to be one of the examples of automation and innovation in the catering niche. I will immediately make a disclaimer that I do not consider myself a fan of fast food, but their approach to work and constant development is truly impressive.

Brief historical background

The history of McDonald’s dates back to the late 1940s, when brothers Richard and Maurice McDonald opened a restaurant that sold hamburgers for 15 cents. Over time, their service system caught the attention of Ray Kroc, who was also distributing the milkshake machine at the time. Kroc became a franchise agent, opening a McDonald’s store in Des Plaines, Illinois in 1955.

McDonald Brothers Restaurant in San Bernardino, 1948-1955

McDonald Brothers Restaurant in San Bernardino, 1948-1955

Five years later, the company bought the brothers’ business for $2.7 million. And the rest, as they say, is history. Today, the chain has about 38,000 fast food outlets in more than 100 countries, employing about 200,000 people worldwide.

Newspaper advertisement announcing the opening of the first "McDonald's" Ray Kroc

Newspaper advertisement announcing the opening of Ray Kroc’s first McDonald’s

What innovations, this is fast food?

So, before we look in detail at the stages of introducing innovation and automation into McDuck’s processes, let me list a few facts about the company itself:

  • McDonald’s became the first central international fast food restaurant.

  • McDonald’s is a leading innovator in the global fast food industry.

  • They were the first to experiment with issuing orders through a window for passing cars.

  • They were among the first to massively indicate the calorie content of each dish for consumers.

However, in addition to the fact that many of the innovations are customer-oriented, well-promoted, and most likely you already know, the company has a wide range of internal developments that are implemented in such a way that customers may not even be aware of them, but it changes their behavior and attitude to catering forever.

So, first of all, in the 1970s, McDonald’s, under the auspices of optimizing internal accounting processes, began to introduce electronic cash register systems for processing orders. This allowed us to minimize errors in orders and reduce customer waiting time. Today it seems commonplace, but in the 70s it caused a wow effect among ordinary people and brought good income to establishments.

Almost a decade and a half later, in 1983, the chain first began using self-service in some US restaurants, where special ordering terminals were installed and customers could independently select and pay for their dishes.

This was the second important step towards reducing waiting times and personnel costs (namely cashiers) at the level of the entire network. As a result, the company was able to not only automate the issuance of orders, but also changed the habits of millions of its customers around the world – and these are much more ambitious changes that set a further trend.

Seeing the success of self-service kiosks, competitors tried to repeat it – some succeeded, but not everyone was lucky – for example, in 1999, McDonald’s acquired the Boston Chicken fast-food chain, which was on the verge of bankruptcy, which was known for its self-service model, after which the company introduced third-party technology into your processes.

McD Tech Labs and Dynamic Yield

One of the most successful deals to fuel the restaurant giant’s innovation growth is the acquisition of Apprente, which McDonald’s acquired as part of its strategy to introduce automated voice systems in its restaurants.

Apprente was founded in 2017 in the United States and specialized in developing voice technologies and artificial intelligence systems to automate communication and orders in fast food restaurants, including McDonald’s. These innovations have helped the company improve the customer experience and streamline internal processes in fast food restaurants.

After acquiring Apprente, McDonald’s used their technology to create an automated voice ordering system, allowing customers to quickly and conveniently order through a voice interface without the need for human interaction for McAuto customers. Subsequently, Apprente became a division of the company, called McD Tech Labs.

We all know the logo with the letter M, and this is the logo of their division

We all know the logo with the letter M, and this is the logo of their division

A little later, in 2019, McDonald’s announced the acquisition of Dynamic Yield, a company developing personalization and automation technologies for the retail industry. The purpose of this acquisition is to improve the consumer ordering experience and personalize offers to customers using machine learning and artificial intelligence algorithms.

However, despite two such large acquisitions, in 2021 McDonald’s entered into a deal to sell Dynamic Yield to Mastercard.

2021 has been a banner year for McDonald’s as the company completed two major divestitures this year. Thus, the McD Tech Labs division was sold to IBM, while the parties did not disclose the amount and terms of the transaction, but it was known that no more than 100 employees were transferred to IBM within the framework of the partnership.

Also on December 21, 2021, Mastercard and McDonald’s announced an agreement under which the payment system developer buys the Dynamic Yield personalization platform. This is McDonald’s largest asset sale in 20 years.

The exact amount of the deal was not disclosed, but sources familiar with the terms told CNBC that the buyer could pay more than $300 million. The deal with Mastercard will allow Dynamic Yield to expand its technology to other third-party businesses, the companies said. It is important to note that representatives of McDonald’s announced the continuation of cooperation between Mastercard and Dynamic Yield in order to continue to implement technology in their branches.

To summarize the above…

All of the deals mentioned above demonstrate McDonald’s commitment to integrating automation and technology into its operations to improve customer service, streamline processes, and make the restaurant experience more convenient and personalized, and they have succeeded. I’m not a fan of fast food, but I admire it and never cease to follow the development of innovations and new trends in catering.

And finally, I’ll give you one of the most eye-catching implementations of fast food restaurants – the technologically advanced McDonald’s at Sydney Airport. Here, the open kitchen is located on the second floor, and guests can watch the process of preparing their order. The orders themselves are delivered by conveyor belt:

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