McDonald’s Digital Transformation – Wall Street is Loving It

Mcdonalds

What’s hotter than a fresh order of McDonald’s fries? McDonald’s stock price. After years of middling performance, the fast food giant’s shares are up nearly 27% and its $180 per share target price is the highest on Wall Street. What’s the reason? Digital transformation. The digital innovations that McDonald’s is bringing to their restaurants are disrupting the fast food burger industry and changing how a fast food restaurant is perceived.

McDonald’s is rolling out digital innovations

McDonald’s set out to implement digital innovation in its business model; its CEO, Steve Easterbrook, said the restaurant chain would become a “modern, progressive burger company.” But that meant going to McDonald’s would become as much about the experience of the restaurant as the food. That meant implementing new features, like ordering from digital kiosks and getting food delivered to your table rather than at the cashier counter. Chris Kempczinski, the president of United States operations, has said that the new features were designed “to personalize and elevate the experience of our customers.”

McDonald’s recently launched McDelivery with UberEats––a service that is now available in over 1,000 restaurants across the U.S. “We are bringing a new level of convenience to more of our customers as we continue to transform the McDonald’s experience,” said Easterbrook. “Through the ease of the UberEATS app, our customers can enjoy their favorite McDonald’s foods delivered right to them enjoying greater choice, control and personalization than ever before.”

These digital innovations are only the beginning. McDonald’s has also announced a mobile app with innovative geo-fencing capabilities that will determine when customers are approaching the restaurant, ensuring the food will be as fresh as possible. The app will also allow for mobile payments and will let customers get their food without standing in line or waiting in the drive-through.

Delivering digital innovations through an

These kinds of digital innovations can take months or years to deliver, particularly when they have to be rolled out across multiple geographies with multiple legacy systems like McDonald’s has. The scale and speed at which McDonald’s had to not only match, but exceed its competitors in digital and mobile technology was dramatic.

McDonald’s is currently building an application network utilizing , replacing a number of disparate API management and legacy software integration products. McDonald’s application network connects its proprietary e-commerce systems and other back-end databases to create a set of reusable APIs for orders, nutrition, customer, location, and offers.

These APIs can be used to rapidly compose customer-facing applications for mobile, social, web, and restaurant-based kiosks. For example, Anypoint Platform enabled the creation of McDonald’s mobile app by using API-led integration to combine disparate systems and create a good experience for the customer. These digital innovations are offering a connected customer experience that the burger chain’s executives think will set it apart.

The elevated McDonald’s experience

Wall Street, for the moment, seems to agree with McDonald’s goals. Andrew Charles, an analyst at Cowen, said, “Our analysis suggests efforts should bear fruit in 2018…MCD has done a great job launching popular innovations within the context of simplifying the menu, while introducing more effective value initiatives that have recently begun to improve the brand’s value perceptions.” And sales rose 1.7% in the first quarter of 2017.

Could McDonald’s digital innovations signal a long-term upward trend for the burger kingpin? It’s too early to tell, but McDonald’s is betting big on the strategy, planning to roll out its new digital experience to all 14,000 US stores by the end of the year. After all, says Paul Pomroy, the chief executive of the company in the UK, “The customer’s perception of the quality of the food has changed…a Big Mac tastes better in a reimaged restaurant, it just does.”

For more on how an application network can help your company create digital innovations and dramatic business outcomes, take a look at our whitepaper, The Value of Connectivity.


 


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