{"id":17028,"date":"2016-11-18T00:07:18","date_gmt":"2016-11-18T05:07:18","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/mcdigital-or-mcdoomed\/"},"modified":"2016-11-18T00:07:18","modified_gmt":"2016-11-18T05:07:18","slug":"mcdigital-or-mcdoomed","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mcdigital-or-mcdoomed\/","title":{"rendered":"McDigital or McDoomed?"},"content":{"rendered":"

The Backdrop<\/em><\/strong><\/p>\n

In recent years, McDonald\u2019s has faced what some call an identity crisis. McDonald\u2019s has had to face customer preferences shifting towards healthier eating, fresher ingredients, and more variety. These shifts have led customers to explore alternatives in the \u201cfast casual\u201d segment, offering them higher quality products in a relatively more upscale environment (key word: relative). This segment grew 10.4% in 2015, compared to broader consumer foodservice at 5.7% [1].<\/p>\n

A recent Consumer Reports survey ranked McDonald\u2019s burgers last, which is not surprising to many who have tried the plethora of other options (SmashBurger, In-N-Out, Shake Shack). McDonald\u2019s drive-thru order times have also increased 25% over the past 10 years and while that only means 37.5 seconds per order, seconds add up and have cost and revenue implications [2]. Subpar food and increasing wait times posed a tough situation for Atif Rafiq, McDonalds\u2019 first Chief Digital Officer, hired from Amazon to make digital a key component of its strategy [3].<\/p>\n

Digital Innovation at McDonald\u2019s<\/em><\/strong><\/p>\n

In May 2015, McDonald\u2019s announced a turnaround strategy with a focus on listening to customers and adapting to changing tastes [4]. Digital innovation has helped manifest these goals in two ways:<\/p>\n

Digital Menu Boards<\/u> \u2013 Back in the day, when breakfast ended at McDonald\u2019s, employees would manually switch the menu boards to display the pending lunch items. Digital menu boards today have the potential to maximize revenue and play to customer preferences real time. Boards are built with a robust content management system and when used properly, menu boards (both in-store and drive-thru) can change to promote popular items at different parts of the day (think: breakfast, brunch, lunch, late night) but also flex to reflect the weather [5]. If it starts to snow or rain, McDonalds can use their data to push different products and take advantage of more specific preferences. Menus can change by region, franchise or even by customer. McDonalds has drive-thru analysis by type of vehicle so a menu board could change because a pick-up truck has pulled through and they know that there are certain order patterns for those cars [6].<\/p>\n

Self-Serve Kiosks<\/u> \u2013 Data shows that on average in fast food restaurants, customers spend 9 minutes waiting for food and 19 minutes eating. 1\/3 of the experience is spent waiting [7]. A study conducted by TIllster showed that only 36% of customers would wait in a line if 5 people were ahead of them. At 10 people, 93% would walk out [8]. There is major potential here for revenue loss and customer dissatisfaction. The data also shows that across age groups, customers are willing to visit restaurants if they have a kiosk option for ordering.<\/p>\n

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Source: Tillster<\/em><\/p>\n

What makes these kiosks innovative?<\/p>\n

    \n
  1. Accuracy \u2013 If a customer uses a kiosk, they can see their order developing exactly how they want it right through to payment. This sends an accurate order to the kitchen and reduces potential for error.<\/li>\n
  2. Upselling \u2013 A customer using a kiosk can easily be presented with add-ons. In the traditional model, McDonald\u2019s had to rely on an employee to upsell. Now, they can show the customer a picture of the add-on and make inclusion of it easy.<\/li>\n<\/ol>\n

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    What Next?<\/em><\/strong><\/p>\n

    If McDonald\u2019s can find a way to remember preferences, when customers come back to the restaurant, or even another location, their preferences could pop up with an option to order exactly what they had last time (with exact specs: no pickles, extra Mac sauce). This would help McDonald\u2019s build out their loyalty program, a piece that\u2019s been lacking compared to competitors.<\/p>\n

    McDonald\u2019s is also working on \u201cThe Experience of the Future\u201d, a concept that uses tablets for ordering that are mounted tableside. Tablets provide entertainment while the customer waits and employees then deliver food right to your table. This helps close the gap between fast food and fast casual, a competitive move worth commending [9].<\/p>\n

    McDonald\u2019s is making great moves but needs to stay mindful of two things:<\/p>\n