- McDonald’s will sell artificial intelligence company Dynamic Yield to Mastercard, the companies announced Tuesday. Terms of the deal were not disclosed, but the transaction is set to close in the first half of 2022. McDonald’s will continue working with Dynamic Yield and Mastercard on digital initiatives, the chain said in a press release.
- The mega-chain bought Dynamic Yield in 2019 for $300 million and later deployed the company’s technology throughout its drive-thrus and ordering kiosks in the U.S., Australia, and Canada to offer customers personalized promotions based on their purchase data, time of day, current store traffic, trending products, and other factors.
- The sale follows reports this spring that McDonald’s was considering a partial sale of Dynamic Yield so it could offload the part of the business that works with retailers to boost online sales but retain the technology that enhances its drive-thrus.
This spinoff isn’t surprising, as franchisees have complained in the past that Dynamic Yield didn’t deliver the sales boost they expected and that its technology failed to meet expectations. Dynamic Yield was McDonald’s largest acquisition in roughly 20 years.
“The acquisition by Mastercard will strengthen unique, existing synergies across McDonald’s digital engagement experiences currently powered by SessionM and Test & Learn. In addition, McDonald’s plans to further scale and integrate Dynamic Yield’s capabilities globally and across ordering channels,” McDonald’s said in the press release.
The deal also reflects McDonald’s larger effort to outsource its technology rather than own and operate it within the Golden Arches system.
“There are certain times when it may make sense for us to go acquire a technology so that we can accelerate the development of that, make sure that it is bespoke to McDonald’s needs,” McDonald’s CEO Chris Kempczinski said during the company’s Q3 2021 earnings call. “But at some point that technology reaches a level of development where I think getting it to a partner who can then blow it out and scale it globally makes more sense.”
In late October, for example, McDonald’s announced it would sell its McD Tech Labs — which was created after the chain acquired conversational technology company Apprente in 2019 — to IBM. Much like the Dynamic Yield/Mastercard deal, McDonald’s will continue to work with IBM to speed up its development and deployment of McDonald’s Automated Order Taking (AOT) technology. IBM will also help add more languages, dialects, and menus to the technology offering.
The meld between Mastercard’s payment expertise and Dynamic Yield’s AI capabilities could help McDonald’s strengthen its digital ordering strategy and deepen loyalty among its rewards members. As of October, roughly $13 billion, or 20% of the chain’s orders in its top six markets, came through digital channels like the McDonald’s app, ordering kiosks, and delivery.
The move could also ease tension between corporate and McDonald’s franchisees, who have been critical of the company’s technology spending and fees for operators.
Once the deal has closed, Dynamic Yield Chief Technology Officer Ori Bauer will transition to CEO of the company. Current CEO Liad Agmon will remain at the firm in an advisory capacity.