©Reuters. File photo: A man reads a sign in the window of a restaurant that has closed as McDonald's announced it has suspended operations due to a system failure in Tokyo, March 15, 2024.Reuters/Rocky Swift/File Photo
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Written by Waylon Cunningham
SAN ANTONIO, Texas (Reuters) – When McDonald's (NYSE:) first opened in the 1940s, employees stood at physical counters, burgers and fries were listed on paper menus, and customers I was paying cash to a human cashier.
How quirky!
Today, technology permeates every aspect of McDonald's business, and calling McDonald's a hamburger technology company would be a bit of an exaggeration.
McDonald's mobile app. An order-taking kiosk without humans. Digitized menus that change based on trends, weather, etc. Combined, McDonald's could generate billions of dollars worth of additional sales and efficiencies for his 40,000 stores in nearly 100 countries.
But the same technology could also bring down McDonald's.
On Friday, McDonald's restaurants in some of the world's biggest markets, including Japan, Australia and the United Kingdom, suffered a system outage, forcing many to temporarily accept only cash or close completely. McDonald's did not disclose the extent of the power outage, but as of Friday afternoon, 12 hours after the outage was first reported, its San Antonio, Texas, franchise was no longer accepting orders through its app or accepting cash.
McDonald's said in a statement that the outage was caused by an anonymous third-party provider during a “configuration change.” Asked for comment, McDonald's referred to that statement. McDonald's Japan said on Saturday that all restaurants and delivery services are operating as usual and apologized for the inconvenience.
The burger giant warned, at least Wall Street, that something like this could happen.
“The company has become increasingly reliant on technology systems,” the company's lawyers wrote in an annual filing with the Securities and Exchange Commission on Feb. 22. Recognizing that “any failure or interruption to these systems could materially impact our operations, our franchise operations, or our customers' experience and service.” ”
The filing also warns about AI, stating that “the artificial intelligence tools we incorporate into certain aspects of restaurant operations may not create the intended efficiencies and may impact our results of operations. “There is.”
But Friday's massive power outage is unlikely to deviate from McDonald's long-term strategy of relying more on technology.
McDonald's wants more customers to order through digital means such as apps and kiosks, which already account for a third of sales in top markets in 2022.
In December, McDonald's announced a partnership with Google (NASDAQ:) to move its restaurant computer systems to the cloud. The global data allows McDonald's generative AI systems to “better understand the widest range of patterns and nuances,” resulting in what McDonald's said at the time was “warmer, fresher food.” It was. Generative AI is already powering much of restaurant operations and personalized sales pitches created from customers’ internal profiles.
It's not just McDonald's. Technology is the immediate strategy of almost all major fast food chains.
Starbucks (NASDAQ:) unveiled its own in-house AI platform called “Deep Brew” in 2019. At the time, his CEO Kevin Johnson said this would lead to increasingly personalized offers, store staffing and inventory management.
“In the next 10 years, we want to be as good at AI as the tech giants,” Johnson said at a 2020 retail conference, according to industry publication Retail Dive. Starbucks hired a former McDonald's executive in 2022 to oversee its use of technology.
The risks posed by this new technology do not only arise from system outages.
Wendy's faced a public backlash after its CEO said during a mid-February earnings call that the company would soon use “dynamic pricing” on its digital signage, which also predates the information age. technology that was impossible.
The chain later clarified that it did not intend to use digital billboards to implement “surge pricing,” which would allow it to charge higher prices during busy times. Rather, Wendy's (NASDAQ:) said its CEO's remarks referred to plans to offer discounts to customers during slower times of the day.
