About five years ago, McDonald’s suffered from disappointing sales growth, deteriorating margins and they were losing market share. It got so bad that analysts were predicting that 2014 will be the first year of negative global same-store sales since 2002. That’s when Operation Turnaround was implemented in 2015.
McDonalds focused on refranchising to increase the company’s percentage of franchised restaurants. The refranchising efforts would cut general and administrative cost by $300 and lower capital expenditures because franchised locations would require less investments. However, the halo effect was refranchising would allow local franchisees to determine specific customer needs and food preferences.
Than in 2017, McDonald’s introduced the kiosks to with the goal of bringing greater control, convenience and personalization to their customers. Customers now had the ability to place their order and have their food brought to them. And with the introduction of the mobile app, customers can personalize their order while skipping the drive-thru line and instead choosing curbside delivery. If customers choose the drive-thru, they will simply read the already placed order code and their mobile order will be ready for pickup at the window.
As a result the stock is only up 125% since 2015.
However, I think McDonald’s out did themselves this week.
Dynamic Yield’s software brings the same type of personalization you might expect when shopping online at Amazon.com. Add a box of Tide laundry detergent to your virtual shopping and a pop-up suggestion for Colgate toothpaste, among other products, fills the lower third of the page. These digital cues are unobtrusive and more importantly, they work.
Gartner, a global IT analytics and consulting firm, predicted in 2017 that companies that fully embraced online personalization would enjoy a 30% sales advantage over competitors. The research report, “Predicts 2018: Brand Relevance Under Fire, Automation on the Rise”, placed Dynamic Yield as the market leader.
McDonald’s serves 68 million customers every day. Getting digital right could mean tens of millions of dollars in profits each year.
The Dynamic Yield’s acquisition was a game changer and the chart suggests price will be breaking the all-time highs in the near future.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.