McDonald’s Discovers the Power of Digital Service

McDonald’s is changing the protocol of service in its restaurants. A new order is set-up in the restaurants, and ‘order’ has an additional meaning here — the weight of the self-service model is transitioned to a model of self-order. The method is no longer reliant on customers ordering their meals at the counter and taking them to tables or for take away, instead it ‘delegates’ customers to compose and submit their orders by themselves through a number of optional digital platforms before being called to collect the meals prepared for them. This change in approach reflects the digital transformation carried out at McDonald’s. Not to be mistaken, the transformational process started already in the early 2010s, but it accelerated in the second half of that decade, and then received a real boost during the COVID-19 pandemic two years ago due to the restrictions on activities imposed for combatting the pandemic.

Adopting digital forms of communication and modes of self-service is the new ‘engine’ chosen by McDonald’s corporate management as its strategic approach for reinvigorating the restaurant chain and lifting again its sales revenues and profits. The company has used different ‘engines’ in the past for similar purposes. More recently, McDonald’s has followed on the ‘health revolution’ of increased health awareness in food consumption in the first decade of the 2000s. Among the steps taken were changes in the menu (e.g., adding salads) and ingredients used in food preparation, also serving hamburger sandwiches in paper wraps printed with nutrition information (as part of the broader ‘green revolution’ the company abolished the use of foam boxes). McDonald’s also tried re-modelling the design of some of its restaurants to better accommodate and appeal to adult diners coming for a meal break during their working day (i.e., adopting an elegant business-like style) in relevant locations. The move was aimed to improve its capture of a different segment of diners than the ‘classic’ segments of families with children and youths. McDonald’s has always had a broad audience of customers, including adults coming in their leisure time who might feel comfortable in different restaurant designs, from the more elegant designs to sitting areas in food halls inside malls.

Over time, McDonald’s has been continuously updating and adjusting its food offerings to changing tastes or dieting preferences, as well as adapting them to different cultural cuisines around the world. For instance, the menu in some places may include hamburgers that are grilled rather than fried — grilled burgers should be tastier as well as healthier than the fried burgers, but special versions (e.g., “Big Premium Texas”) also tend to be costlier. The restaurant chain also allows more toppings added to burgers, other than cheese (e.g., bacon, fried onions). McDonald’s is also bringing back its McChicken sandwich offering as an alternative to beef.

As indicated above, McDonald’s offers by now alternative digital channels or platforms for ordering food, which consumers can choose to eat on-premises at restaurants, take-away, or receive by delivery. These channels include self-order kiosks (installed in restaurants since 2017), mobile ordering, third-party delivery, and outdoor mobile digital menu boards for drive thru pick-up (Restaurant Business Online, 28 April 2022 [1]). The self-order kiosks are perhaps the most discernible at McDonald’s restaurants these days (staff is no longer available for taking orders though members of staff may be asked for assistance in using the self-order interface). The drive thru service has been overhauled especially in the USA during the pandemic crisis. Customers may also order via the McDonald’s mobile app in addition to ordering online on the website.

The experience of self-ordering with the kiosk may be quite different for various groups of customers. For younger and digital savvy diners it may seem more natural and intuitive to order this way. For the more mature diners (40+) who nevertheless got accustomed to the computer-digital age it could be more effortful to self-order and hence require more training and assistance to get a better grab of the process. For diners who are elderly citizens, ordering at McDonald’s could be mission impossible and therefore staff assistance would be essential for them to complete an order — one should mind that for the elderly customers who do not want to stay at home alone or prepare their meals in the kitchen, eating in a restaurant of McDonald’s can be a convenient dining solution and an enjoyable treat. At any time that there are customers around on-premises, a dedicated member of staff should be assigned to help with self-ordering those who encounter difficulties.

In a renovated McDonald’s restaurant — at the front, a self-order kiosk, next to a comfort sitting area

The first thing a diner-user notices when facing the opening screen of food options is the variety of set meals and single items available — it can take a diner a few minutes just to figure out what he or she wants and where to press to proceed; the next stage (screen) usually reveals more item options or variants in a category. When a set meal with a specific burger serving type is chosen, the process is well-structured for ordering a meal for one person; selecting the meal, adding the French fries and drink and completing the order by payment may take up to five minutes. But often there are stipulations to be considered. First, customers appear to spend much of the time in front of the kiosk in search until choosing a type of burger meal (e.g., spending five to ten minutes exploring options, going back and forth between screens until a choice is made). Second, obtaining an order in up to five minutes could be a result of several ‘training’ experiences, and assuming one knows in advance what type of meal to select. Third, the self-order process can take longer when choosing a number of different meals (e.g., for two or three family members), or when trying to compose a ‘customised’ meal of different single items.

In the past, one could look up at menu screens above the counter from some distance, choose and then approach to order. Taking the time to explore the options, choose, and complete the ordering process at the kiosk can become stressing especially when there are customers waiting behind you to use the kiosk. It might be helpful for customers to prepare themselves by exploring the menu on the website before approaching the kiosk. But now there is another option to place the order on one’s mobile phone using the McDonald’s app. Furthermore, customers may submit an advance order before arriving to the restaurant and then just ‘activate’ it (on the app or self-order kiosk) to inform the staff to prepare it. The advantage for customers should be that each one can choose the platform most convenient for placing an order, using the self-order kiosk facility, the website, or the app on one’s private smartphone,

There is an additional twist to the change in approach to self-service: As diners now self-order their meal, they can ask the meal to be brought to them to the table by a staff member — self-order makes room for allowing service-to-table. Another aspect of the digital shift at McDonald’s is the new digital-driven customer loyalty programme, MyMcDonald’s Rewards, tied also with the use of a company-based digital currency, McCoins (for collecting reward credits and payment).

The launch of digital strategy at McDonald’s can be credited to Don Thompson, CEO from 2012 to 2015. He was previously engaged in designing robotics for food transport and cooking equipment in the company. Thompson was likeable by employees and considered a ‘good cop’ with regard to making tough decisions such as cost cuts (i.e., being reluctant to make them), but he lost favour among the directors and investors because business performance was unsatisfactory (i.e., same-store sales declined in 2014 for the first time in a decade, revenues and profits also declined in 2014 and 2015). Steve Easterbrook was appointed the next CEO, serving from 2015 to 2019. He was considered a success in running McDonald’s in the UK and over whole Europe. Easterbrook had a strong impact on the company, changing the way it works and attempting to change its culture (i.e., from McFamily to McTeam). He made the cost cuts expected of him that helped to lift profits (though revenues continued to decline during his tenure) and added $50bn to market capital of the company. But more pertinent to the digital strategy, Easterbrook acted to accelerate the implementation of digital technologies in restaurants, such as in starting installment of the self-order kiosks in 2017. Unfortunately, Easterbrook had less of an agreeable character and was dismissed from his role and from McDonald’s for having inappropriate relationships with female employees and sexual misconduct. Chris Kempczinski replaced him as CEO of McDonald’s, still presiding since 2019 and through the tough period of the coronavirus pandemic. [2]

Kempczinski was actually brought-in to McDonald’s by Easterbrook. In his former role, before accession to CEO, Kempczinski as head of US business already helped Easterbrook in designing their Bigger Bolder Vision 2020 and executing the digital transformation in the company; Kempczinski was assigned eventually to lead the way as CEO [2]. The conditions set by the pandemic paved the way for pushing ahead the digitization of service in restaurants, particularly equipping them with self-order kiosks and the re-modelling of the car drive thru self-order and pick-up service, facilitated by digital mobile menu boards (Note: These menu boards were enhanced by AI-enabled advanced analytics for greater personalisation of the ordering experience — McDonlad’s acquired the firm Dynamic Yield for its technology in 2019 but lately decided to discontinue this venture and to sell the firm [3]).

  • The digital strategy of McDonald’s that is tied with its growth plan is known as ‘Accelerating the Arches’. In Q2/2022 (ending 30 June) digital sales in the top six markets of McDonald’s (including the US) reached $6bn, making nearly third of total (‘Systemwide’) sales. Total global comparable sales of the company rose 9.7% (US market +3.7%). McDonald’s is present according to its report in nearly 40,000 locations, with approximately 95% of the restaurants owned and operated by independent local owners (franchisees)(Corporate McDonald’s, Earning Report, Q2/2022)

In early 2020 McDonald’s also created a new Digital Customer Engagement team (headed by executive Lucy Brady) to support and advance implementation of its digital strategy. The team’s title and executive role probably were also meant to manifest the company’s commitment to use digital technologies to the benefit of its customers (while aiming to boost sales). The team would concentrate, it was stated, on personalisation, digital ordering, payment, loyalty, and delivery (CNBC, 8 January 2020). Kempczinski explained the motivation: “In a world where the storefront of a McDonald’s restaurant can be the screen of a smartphone, we’re building stronger relationships with our customers, knowing what they like, how they like it, when they want it” [1].

The implementation of the strategic digital plan created though tensions and stirred resentment, particularly among restaurant owners-franchisees in the US (some of them even organised in a group as National Owners Association). The dispute started already at the time Kempczinski was head of the US business under Easterbrook. First, franchisees were required to bear the cost of overhaul technological upgrades of restaurants with digital systems ($700,000 per restaurant, the corporate was planned to undertake 55% of the total $10bn cost of the endeavour). Second, franchisees were asked to purchase from McDonald’s corporate the ‘official’ app customers would use; that demand raised objection, arguing that it stood against a rule set by founder Ray Kroc that the corporate should not be a supplier to franchisees. The matter of the app was part of a larger dispute on who should pay the technology bill, but this also carried an issue of principle to some franchisees. The resentment was fueled by an allegation that Kempczinski could not understand them because he did not ‘grow’ through the ranks of the company as previous CEOs. Largely, the feud over technological matters and their financing, together with other concerns (e.g., McDonald’s staying as a family), surfaced deeper conflicting views on the nature of relations that should prevail between the McDonald’s corporate that owns the brand and the restaurant owners-franchisees who are facing the customers-diners. [2]

McDonald’s has not been acting in isolation in the food service market. The forms of service have been shifting in the whole field of fast food, quick service restaurants, but also in coffee bars / houses — that is, over a whole range of food serving establishments. Self-order kiosks are installed in other food chains (including in restaurants of the direct competitor Burger King). Coffee houses have transitioned to service models that require customers to order their food first at the counter before taking seat at tables; usually they also have to return indoors to collect their order (some businesses provide customers with an electronic ‘alarm’ device that informs them by beep and light-blink when the meal is ready).

McDonald’s has made an essential move forward in implementing novel and advanced technologies for customer service in its branded restaurants. However, the digitization of self-service will not necessarily grant the company a competitive advantage. How well it succeeds in this technological endeavour for attracting customers and raising revenues may depend on an envelope of service that supports and complements the use of technological facilities — that is, not just which kinds of advanced and innovative technologies are introduced, but furthermore how the restaurants make them useful and helpful to customers. It should not be forgotten that the food offerings and human touch continue to play a role.

Ron Ventura, Ph.D. (Marketing)

Sources:

[1] “McDonald’s, Once a Tech Laggard, Becomes a Digital Sales Leader”, Jonathan Maze, Restaurant Business Online, 28 April 2022

[2] “McFamily Feud”, Beth Kowitt, Fortune (Europe Edition), April-May 2021, pp. 35-45,

One thought on “McDonald’s Discovers the Power of Digital Service

  1. Daniel Rainer

    Fantastically insightful! last week, my grandson asked me to buy a burger from McDonald’s and for the very first time I stood before the digital Kiosk. At first, I found it rather intimidating, but everything went smooth. I knew what the kid wanted and the made it easier. The presence of people behind me in the line made me a bit edgy though.

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