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Inside McDonald's digitally-focused future

The company is doubling down on delivery and drive-thru innovation, potentially changing how customers interact with its restaurants.
Photograph courtesy of McDonald's

The future McDonald’s is going to be a lot different. It could have a third drive-thru window along with a mobile-order lane complete with a conveyor belt that delivers food. The order taker could be automated. And it may or may not have seats inside.

During a presentation to investors earlier this week, the Chicago-based burger giant unveiled a series of changes that could change how the company’s restaurants interact with customers for years. They are designed to integrate digital ordering more fully into the McDonald’s ecosystem while pressing its advantage on drive-thru ordering and doubling down on delivery.

“Technology has changed our expectations as consumers,” Lucy Brady, McDonald’s chief digital customer engagement officer, said on Monday. “It isn’t just that we count on technology to make things simpler, easier, faster. Today, our assumptions around how things should work are shaped by whoever is doing it best.”

The effort is being made in the shadow of a pandemic that has shifted consumer habits in a hurry, emphasizing the importance of the drive-thru and making digital strategies paramount to a concept’s success.

“The needs of our customers coming through the pandemic are going to be different than they were coming in,” CEO Chris Kempczinski said at the outset of the presentation. “The restaurant experience we offer must change to meet these evolving needs.”

And, he notes, that all plays to the company’s strengths. “A world with less dine-in and more takeout plays to our significant long-time strength in drive-thru and our growing strengths in delivery and curbside.”

The upgraded drive-thru

The next person to take your order at the McDonald’s drive-thru may not even be a person.

McDonald’s is testing automated order-taking in its drive-thrus, a strategy that Mason Smoot, the company’s chief restaurant officer, said could improve speed and order accuracy. “We’re able to greet customers in a consistent manner when they arrive, accurately take their order and thank them for visiting McDonald’s,” Smoot said. “Our customers like it because it made the ordering process easier and more streamlined.”

About 65% of McDonald’s restaurants globally feature a drive-thru, and the company wants to build more—many of the 1,300 locations the company plans to build next year, mostly outside the U.S., will feature the window.

Going into the pandemic, the company had been upgrading technology, such as dynamic menu boards, while emphasizing speed. As the quarantine hit, McDonald’s dramatically cut from its menu to boost efficiency. The result: It cut 30 seconds from its drive-thru times, on average. The efforts worked like a charm, helping McDonald’s sales to recover more quickly than anticipated back in March as drive-thrus became a go-to spot for customers.

McDonald’s is testing other strategies designed to press that advantage. It is trialing an express lane for mobile ordering and pickup. The lane could feature a conveyor belt that brings food to the third lane. McDonald’s is also testing an “on-the-go restaurant format” that would have few or no indoor seats, just a drive-thru, takeout and delivery.

“We have the most drive-thrus,” Smoot said. “We also know how to do it best.”

McDonald's drive-thru

Digital ordering ecosystem

McDonald’s is developing a new digital growth engine called MyMcDonald’s that combines the digital and customer-facing technologies the company has developed in recent years, including its in-store kiosks, outdoor digital menu boards and flexible payment systems.

The centerpiece is a loyalty program that will start testing in Phoenix in the coming weeks and is expected to debut next year, a long-awaited strategy already adopted by many of its big-chain rivals. Yet McDonald’s believes its experience will be seamless and can be used at any of its order points.

McDonald’s is testing an express pick-up at the front of its restaurant for mobile orders. And it is testing something it calls ID at COD, or identification at customer order display—a method for enabling customers to identify themselves when they order, whether it’s at a kiosk or the mobile app or the drive-thru.

Digital ordering has become significant during the pandemic. Brady noted that, in the company’s six largest global markets, digital sales are expected to exceed $10 billion, or nearly 20% of systemwide sales.

The MyMcDonald’s digital engine is “a single suite of compelling offerings” that give customers incentives to engage with the brand digitally, whether through mobile ordering, payments, delivery or rewards. It is “not just about the mobile app,” Brady said. “It extends to all digitally-enabled customer touchpoints from kiosk to table service to digital drive-thru and powers an omnichannel experience no matter what our customers want their McDonald’s to be at any moment.”

McDonald's front pickup

Doubling down on delivery

Delivery has also become significant during the pandemic. McDonald’s has the service at 28,000 of its 41,000 global restaurants. The service “has become a meaningful part of our business in just a few short years,” CFO Kevin Ozan said. Delivery sales have more than tripled, particularly during the pandemic that made ordering from home a relatively safe dining option.

McDonald’s plans to introduce the option to order delivery through its app in its top markets next year, enabling the company to “own the end-to-end delivery experience.” It is also considering self-delivery as an option in countries like Australia and Germany where third-party delivery doesn’t have enough coverage to meet demands.

The company already has self-delivery in places like China and the Middle East, and so the company would expand that option to other countries. “We have a good idea of what it takes and what conditions make sense,” Brady said. “As our business starts to get bigger, and we get to a certain size and scale, there are a lot of different models we’ll deploy depending on what conditions make sense.”

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