The #3 com­pa­ny on our Fran­chise 500 list is bet­ting on tech­nol­o­gy to dri­ve future sales.

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This sto­ry appears in the
Jan­u­ary 2020

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From the remote island of Mau­ri­tius to the dis­tant deserts of Kuwait, you can’t escape the Big Mac. The world is home to more than 38,000 McDonald’s. So what’s left to con­quer? 

Try Sil­i­con Val­ley. Ronald McDon­ald has land­ed in tech land, not with burg­ers but with new­ly acquired tech­nol­o­gy that aims to dis­rupt the fast-food world it helped build

McDonald’s has ranked near the top of the Fran­chise 500 for the past three years, and much of the cred­it goes to its push toward mod­ern­iza­tion. With its $10 bil­lion sys­tem-wide store redesign near­ly com­plete, McDonald’s is now upload­ing new tech to accel­er­ate its race toward the future.  

Relat­ed: 5 Things You Should Know Before You Buy a McDon­ald’s Fran­chise

In 2019, the com­pa­ny acquired two com­pa­nies that sig­nal its ambi­tions: Dynam­ic Yield, which builds dig­i­tal menu dis­plays that tai­lor sug­ges­tions to the time of day, weath­er, and items already in cus­tomers’ orders; and Apprente, a voice-based AI com­pa­ny that will kick off the new­ly mint­ed McD Tech Labs in Moun­tain View, Calif. 

But despite $21 bil­lion in 2018 rev­enues, the fast-food OG faced some chal­lenges last year. CEO Steve East­er­brook was fired over a con­sen­su­al rela­tion­ship with an employ­ee, and despite a 5.9 per­cent increase in glob­al same-store sales, third-­quar­ter earn­ings fell short of expec­ta­tions. (The com­pa­ny would not make an exec­u­tive avail­able for an inter­view for this sto­ry.) That said, rev­enues spiked by $61.2 mil­lion, and redesigned stores are see­ing mid-sin­gle-dig­it uplifts in sales. The good news has insu­lat­ed the com­pa­ny from the bad, and it’s cur­rent­ly rid­ing on 17 con­sec­u­tive quar­ters of growth. Dur­ing his last earn­ings call in Octo­ber, East­er­brook said he expect­ed McDonald’s recent­ly added deliv­ery pro­gram to dri­ve $4 bil­lion in sales by the end of 2019; McDonald’s is now fill­ing 10 deliv­ery orders every sec­ond.

It may be too ear­ly to assess the company’s tech gam­ble. “But if it brings down the speed of ser­vice, it’s worth it,” says long­time restau­rant ana­lyst Howard Pen­ney at Hedg­eye Risk Man­age­ment. “McDonald’s is the first. They are lead­ing the way. Nobody is doing what they are.”

Check out our com­plete Fran­chise 500 rank­ings, or view more sto­ries here.

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