NewsWire: 11/14/2020
- McDonald’s is doubling down on AI to get an edge on the competition. The company plans to combine high-tech drive-thru upgrades with a new loyalty program to make ordering and pickup faster and more seamless. (Wired)
- NH: For the last few years, McDonald’s has been quietly purchasing AI-based companies. In March 2019, they bought Dynamic Yield, a customer service machine learning startup, for $300 million. And last fall, they purchased Aprennte, an AI voice startup similar to Alexa and Siri.
- These startups are working on ways to recommend food and speed up ordering. Dynamic Yield is developing a drive-thru menu that changes its recommendations based on the weather and time of day. If you order in the morning, it may highlight a large coffee, but if you order on a hot summer's day, it may recommend an ice cream. Aprennte’s AI voice will take customers’ orders instead of a human, supposedly increasing drive-thru efficiency. (See “McDonald’s Rolling Out AI-Powered Menus.”)
- McDonald’s is also working on a new rewards-based app. Using the app to order, customers will gain access to special discounts. The app will also track a customer's location and perfectly time their order’s completion with their arrival. There will even be a drive thru-lane specifically for people who order online.
- McDonald’s of course isn’t alone. Dominoes has long been investing heavily in online technology. Many industry analysts consider Dominoes to be a tech company that just happens to sell pizza. And Chipotle just opened its first ghost kitchen, a restaurant that only offers delivery and takeout.
- The pandemic has accelerated many of these investments in AI and drive-thrus. With many people avoiding dine-in experiences, drive-thrus are perceived as safer. While 61% of restaurants in the US have closed due to Covid-19, McDonald’s (MCD) stock is still up over 9% YoY.
- Many of these upgrades may seem minor, but their future uses could change McDees' entire value proposition. By tracking your phone and examining your cookies and car model, it could move on to personalized menus, personalized service, and personalized pricing (aka, price discrimination). And who really needs labor-intensive in-restaurant service at all? Inspired by the lockdown popularity of drive-thrus, the company is talking about phasing out any in-house service at selected locations, thereby following Chipotle's model.
- To be sure, there will be a generational divide on the acceptance of this technology. Many Boomers and Xers really loathe talking to chatbot and picking their way incredulously through computer-generated scripts. (Please, can I speak to a real human?) Millennials, on the other hand, are more likely to embrace the AI experience with few misgivings. They know how to navigate menu-driven AI, and they are often relieved at not having to interact with real people. They actually like the gamified, reward-based interface. And above all, they are optimizers who value efficiency and speed and don't want to be distracted.
- Any decent AI will no doubt be able to guess a costumer's age and along with other characteristics. It will then be able to instruct the store to go all digital--or not--depending on the person it's interacting with. (See "Ex Machina: Empathy.")
Did You Know?
- A Rise in the Newly Naturalized. The number of green-card holders who are becoming U.S. citizens has risen to the highest level in 11 years. That’s according to a new report from the Department of Homeland Security Office of Immigration Statistics. In 2019, 843,593 green-card holders took the oath, up 11% from 2018. The most common country of birth was Mexico, followed by India, the Philippines, China, and Cuba. The process of becoming a citizen takes up to a year, costs $725, and requires applicants to pass a civics test. Earlier this year, DHS announced that the fee was going to rise substantially in October to $1,160, which could have spurred some green-card holders to take the next step. (The increase has since been delayed.) Another contributing factor could have been the presidential election, since one of the benefits of citizenship is the right to vote. Citizenship applications also spiked around the 1996, 2000, and 2008 elections.
