McDonald’s Charts Future Path Nourished By Data-Driven Transformation
McDonald’s is an American institution. Founded in 1940 as a restaurant operated by Richard and Maurice McDonald in San Bernardino, California, McDonald’s grew under the leadership of Ray Kroc to become the world’s leading quick-service restaurant brand, serving over 70 million customers, through nearly 40 thousand outlets in over 100 countries. Today, McDonald’s is one of the most iconic brands in the world.
Even great companies — and especially true in the case of great companies — must stay ahead of their market competitors by adapting with the times and with evolving business, market, and social conditions. While many companies are hesitant to embrace change – “why would we need to change?” – truly great companies make a commitment to grow and adapt to a changing world. In the instance of McDonald’s, embracing change is an essential element of remaining a worldwide leader. One way this is achieved is through a commitment to digital transformation grounded in data-driven decision making, particularly as it enables greater personalization and enhancement of the customer experience.
Craig Brabec is Chief Data Analytics Officer (CDAO) at McDonald’s, a position he assumed in the Fall of 2020. Brabec was previously Global Lead for Data Insights and Analytics at Ford Motor Company, and before that was the longtime Chief Analytics Officer for Caterpillar. Brabec explains, “As McDonald’s CDAO, my mandate is to infuse data for value across the global enterprise. In this capacity, I am responsible for leading enterprise data transformation, establishing a best-in-class data strategy and governance, and evangelizing these changes across McDonald’s.” He continues, “As part of McDonald’s strategic growth plan, ‘Accelerating the Arches,’ the company is committed to innovation across “Digital, Delivery and Drive Thru.” McDonald’s is committed to initiatives that accelerate efforts that ensure a more convenient and unique customer and crew experience.”
As an example of how McDonald’s is employing data and analytics to improve the customer and crew experience, Brabec cites the effort that McDonald’s is undertaking with development and deployment of Automated Order Taking (AOT) technology in McDonald’s restaurants. McDonald’s is partnering with IBM on the AOT initiative, relying on their expertise in delivering customer care solutions with AI and natural language processing. AOT automates customer interactions, using customer data and order details to accelerate order accuracy and fulfillment with minimal human intervention. Through AOT, employees can be more effective. Instead of taking and entering orders, they can focus on other responsibilities. An automated food ordering system eliminates mistakes in accepting orders, as customer data and order details are displayed on digital menu boards. AOT can also support customer service and marketing activities by building a database of online ordering experience that enables data-driven decisions and the automation of customer communications, including personalization.
The development and testing of AOT technology in McDonald’s restaurants is delivering benefits to customers, while enhancing the restaurant crew experience. Brabec notes, “Our focus on the customer and crew experience drives us to look to apply AI across the business – in high touch customer areas, and also supply chain; restaurant operations, design and development; sustainability; and even corporate functions.” Research shows that use of AOT to deliver data-driven service has a positive impact on worker productivity and overall profitability. McDonald’s top six markets saw more than a quarter of their systemwide sales (or ~$18 billion) come from digital channels – comprised of the mobile app, delivery and in-store kiosks – in 2021, which is a 60% increase over 2020. While some may say, “if it’s not broken, why fix it?”, McDonald’s is aiming higher. Their digital and data transformation efforts are focused on merging physical and digital activities to generate a continually improving customer experience, what Brabec calls, “moments that last.” To this end, McDonald’s is looking beyond “delivering food that is hot and good quality” to delivering a level of personalization based on understanding a customer’s lifetime relationship and lifetime value to the brand.
While much of McDonald’s efforts have been focused on creating destinations which are notable for the customer dine-in experience, this is balanced with the growing demand for delivery orders, which Brabec refers to as “food leaving the building.” He notes the lines of delivery couriers that reflect the increase in digital pickup orders. What were once known as “fast food” restaurants are today referred to more politely as Quick Service Restaurants, or QSRs. Prior to the arrival of COVID-19 in 2020, QSR restaurants had been expanding at a record pace. According to a December 3, 2021 article in QSR Magazine, Fast Food Emerges from COVID a More Resilient Industry than Ever, digital sales increased from 15% to 75% for some franchises. Digital transformation has accelerated efforts to personalize the customer experience. One industry executive noted, “All of these efforts, along with the use of enhanced analytics, are allowing us to consistently attract more visits from loyalty members.”
Brabec notes that companies like McDonald’s must consider a range of issues based on customer data, such as urban versus suburban footprint, and new concepts. He highlights the importance of applying thinking from other industries, such as reducing inventory on the lot, reducing complexity, and other ways of “making hamburgers in volume.” McDonald’s measures the business value of its investment in data and analytics by tracking overall business performance, as well as customer experience metrics. Brabec concludes, “It’s important that our efforts are directly tied to business performance — to demonstrate their real impact, and to prioritize and align with our strategic initiatives.” The next time you visit McDonald’s, take note of how data, analytics, and digital capabilities are being applied to nourish the dining experience.