McDonald’s unveils Google deal to use AI to produce better burgers

McDonalds  (MCD) – Get Free Report joined a growing list of companies eager to tout the potential of artificial intelligence to boost sales and profit through a partnership with Google  (GOOGL) – Get Free Report it says will help expand its global loyalty base to around 250 million.

McDonald’s said that through a cloud-computing deal with Alphabet’s  (GOOGL) – Get Free Report Google, it would use so-called generative AI to accelerate innovation in its equipment, spot trends that disrupt its business and supply-chain processes and reduce complexity for restaurant crews.

The world’s biggest restaurant chain says the move will collectively result in “customer benefits such as hotter, fresher food” around its global restaurant system. 

“We’re focused on making AI more helpful for everyone, with the potential to unlock many new opportunities for innovation,” said Google CEO Sundar Pichai. 

“The restaurant industry is already benefiting from these advances, and we’re excited to see how McDonald’s will use our generative AI, cloud, and edge computing tools to improve their iconic dining experience for their employees and their customers all over the world,” he added. 

McDonald’s product-quality drive

The AI plans form part of McDonald’s ongoing product quality drive. The chain is looking to grow its global restaurant base by around 10,000 sites over the next three years while boosting its loyalty program membership, currently pegged at 150 million, by around two-thirds.

McDonald’s said that would put it on track to add another $45 billion in sales by 2027. 

“We have a clear trajectory for future growth as we continue to build on the brand strength, global footprint and digital ecosystem that have resulted in unparalleled competitive advantages and cemented McDonald’s as one of the world’s leading consumer-facing brands,” CEO Chris Kempczinski said.

The group will also roll out a new universal software system for all McDonald’s restaurants, as well as its digital platforms and kiosks. It says that’ll ensure “less complexity and more stability; and customers will enjoy a more familiar, consistent experience no matter where they go or how they order.”

“The scale of incoming information from all corners of the globe will allow McDonald’s GenAI models to better understand the broadest range of patterns and nuances, resulting in more informed tests and automated solutions to enhance restaurant operations,” McDonald’s said. 

Earlier this fall, Reuters reported that McDonald’s was set to boost its annual fees for new franchisees by between 4% and 5%, marking the first increase in three decades. 

It would come as the group continued to find ways to widen profit margins while focusing on targeted ad campaigns for value-conscious diners still pinched by elevated inflation in the world’s biggest economy.

MCD Q3: More sales at slimmer margins

McDonald’s said same-store sales for the three months ended in September rose 8.8%, firmly ahead of Wall Street forecasts, while U.S. sales jumped 8.1% powered by “strong average check growth driven by strategic menu price increases.”

Group revenue rose 14% to $6.69 billion, topping analysts’ estimates of a $6.58 billion tally, with the overall tally blunted somewhat by the strength of the U.S. dollar.

McDonald’s shares, which have underperformed both the 9.3% gain for the Dow and the near 20% advance for the S&P 500 so far this year, were last marked 0.6% lower, changing hands at $284.90 each. 

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