What McDonald's acquisition of Dynamic Yield tells us about digital transformation

Dynamic Yield will show food based on time of day, weather, restaurant traffic, and food that is trending. Dynamic Yield can also suggest and display items.

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McDonald's has acquired Dynamic Yield, a company that focuses on personalization and recommendation technology, in a move that the company hopes will accelerate its digital transformation.

The restaurant chain plans to utilize Dynamic Yield to offer customized experiences on its menu. Dynamic Yield will show food based on time of day, weather, restaurant traffic and food that is trending. Dynamic Yield can also suggest and display items.

In other words, McDonald's is hoping to replicate tools like Amazon's recommendation engine on a physical menu. McDonald's has already invested heavily in digital kiosks.

McDonald's said it will keep Dynamic Yield as an independent company and will continue to invest in the company's platform.

Also: Food factory AI: How McDonald's automation lets the crew focus more on customersMcDonald's planning to launch mobile ordering, payments in 2017What is digital transformation? Everything you need to know about how technology is reshaping business

This acquisition is interesting for a few reasons. Here's what it means on the digital transformation front:

  • Companies see their digital customer experience efforts expanding into physical areas.
  • By bringing personalization to digital menus, McDonald's may be able to boost same store growth, improve satisfaction and become more analytical.
  • Mobile and retail are merging. McDonald's will implement Dynamic Yield in its drive thru areas at restaurants and also being to integrate into its apps. The app, mobile order and pay, in-store kiosk and physical touch points are likely to merge.
  • Traditional companies are finding that it makes sense to own technology outright. What's unclear is how the McDonald's acquisition of Dynamic Yield will affect the firm's current customers. McDonald's said Dynamic Yield will serve current and attract new customers. Target's acquisition of Shipt may serve as a template.

Dynamic Yield's platform covers customer data management, personalization, recommendations, behavioral messaging, testing and optimization and triggering engine. Industries include financial services, e-commerce, media, travel, and gaming.

Also: Data, AI, IoT--The future of retail ZDNet special report | Download the report as a PDF TechRepublic 

Here's a look at G2's personalization engine rankings.