If you haven’t been following McDonalds you should be. Let’s take a look at that Big Maccer, shall we?
What’s going on, Big Red Car?
What happened has been a new 52-year-old CEO — since 2015 — and he’s a Brit — Steve Easterbrook — who has been with the company since 1993.
He started as a store manager and has most recently the head of the company’s United Kingdom and Northern Europe divisions.
Married with three bambinos, he makes a smooth $15,000,000 annually — salary $1.3MM, stock options $9MM, and incentive comp $4.6MM. He lives in Chicago. [No wonder he has a smile on his face, eh?]
He was an accountant with Price Waterhouse, the CEO of PizzaExpress (UK), and the CEO of Wagamama (UK). He left McDonald’s and returned.
He is an innovator and brought the $1 Soda Deal, the $5 Two Item Deal, and Breakfast All Day, but that’s not all.
Tech? McDonalds is a tech company, Big Red Car?
Well, sort of, dear reader. Let me tell you some interesting things, may I?
1. Easterbrook is a man on a mission to change McDonalds. In his first year, he fired or let go (not sure I know the difference) eleven out of the top fourteen senior executives. That’s 11/14. Hello, Mickey D!
He wanted his own team and he got it. Big time.
2. Easterbrook fancies himself a DATA GUY. He looks at the numbers and he wants to drive the business the direction the numbers say is the path to the Promised Land.
3. One of the first things he noticed was that 100% of the people who were late for the breakfast cut off were pissed off. So, he made Breakfast All Day.
4. He noticed that McDonalds was losing the delivery war to everybody — so he teamed up with Uber Eats for an exclusive delivery agreement, creating instant delivery cred. (Uber Eats counter inside the store to streamline the operation.)
McDonalds predicts their delivery business alone will amount to $4,000,000,000 in revenue by the end of 2019.
This was a direct shot at Burker King who was considered to be light years ahead of McDonalds.
5. Now for the tech elements, dear reader. Intellectually, Easterbrook sees the McDonalds unit as a huge data processor which he intends to fill with machine learning and mobile technology.
This shows up as ordering kiosks that not only take orders, they suggest upselling additions (some based on the outside weather conditions — who doesn’t want a nice hot latte on a cold autumn day?) while they remember customers.
Coupled with license-plate scanners, they are trying to place a face on every customer.
Ultimately, they will try to configure repeat orders from the data acquired about repeat customers.
6. McDonalds was one of Apple’s first Apple Pay Mobile Payment System Launch Partners — a deal Easterbrook cut with Tim Cook when Easterbrook was the Global Chief Brand Officer of McDonalds a year before he took over as CEO.
7. McDonald’s has launched the “Experience of the Future” program which attempts to totally reimagine the operating unit. In addition to the ordering kiosks, new furniture, a fresher more modern look, McDonald’s introduced a granular level of customization — such as adding more sauce or bacon to a Big Mac.
McDonalds has offered to put up 55% of the capital required to make this transformation. Huuuuuge undertaking that has already taken root.
8. McDonalds now offers curb-side pickup on To Go orders. When your cell phone arrives within 300′ of the store, the order you placed using the McDonald’s app springs to life on the store order list.
This is automated. No humans involved. A McDonalds worker brings your order to you.
Sounds good, Big Red Car, but is it really tech?
Yes, dear reader, the company is really doing this.
In March 2019, McDonalds acquired artificial intelligence startup Dynamic Yield (NYC and Tel Aviv) for $300MM. Already the company is working on predictive software the likes of which drive Amazon, Netflix and their impulse buying revenue driver.
In April 2019, McDonalds acquired a small piece of Plexure Group, Ltd, a New Zealand mobile app vendor that is focused on tailored offerings and loyalty programs.
McDonalds just announced it is buying Silicon Valley jewel Apprente, Inc. a voice recognition company. This is seen as providing an opportunity to translate digital orders into verbal instructions for kitchen staff as well as allowing customers to talk their order onto the order board.
That’s three solid acquisitions in a six month period. Every one of them has a digital thrust to push McDonalds toward technology that is customer service, ease of order entry, or labor reduction oriented.
Easterbrook is the driver behind all of this. He says, “In the modern day, the fast eats the slow.”
Is it all rosy, Big Red Car?
No, dear reader, nothing is all rosy. What is good is significant revenue growth and that stock price.
What is creating friction is unhappy franchisees who are balking at large capital expenditures.
In addition, McDonalds gets a lot of flack for low, entry level wages averaging less than $11/hour. This is garnering political attention. Clearly, this is one reason why McDonalds is trying to automate and eliminate labor.
Oh, yes, lest we forget — incredible artisan burger competition. But, on this front, McDonald’s positions itself as the cheaper, almost-as-good alternative.
So, there you have it, dear reader. McDonalds stock is indicating a favorable reaction, but it is a work in progress and a lot of that work is tech based.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.
Then, of course, you have the new McDonalds Salesman-in-Chief. Hail to the chief!
What is it going to take to put you in a nice, juicy McDonalds Quarter Pounder with fries?