The founder of McDonald’s, Ray Kroc, had a saying he was fond of - if you're not green and growing, you're ripe and rotting. It’s a mindset that prevails to this day, according to current CEO Christopher Kempczinski as he announces the next phase of the fast food giant’s ongoing digital transformation.

Back in 2020, the company launched its Accelerating the Arches initiative, he says:

We were transforming the company for our digital-first future. Internally, our mantra was perform and transform. Our legacy technology infrastructure was outdated, inefficient and unstable. Hundreds of finance and HR systems, every country on its own app, data puddles instead of data lakes. Technology wasn't an enabler. It was a handicap.

That’s no longer the case, he adds:

We've done the hard work to re-structure our company and establish one McDonald's way of operating to better leverage our size and scale. This includes common technology platforms, a single enterprise data foundation, operating systems and capabilities that can be deployed across more than 46,000 restaurants...Every day, we serve more than 70 million customers. Our menu is iconic, reflected by our 17 billion-dollar brands. Nearly 220 million customers regularly use our app and participate in our loyalty program, making it one of the largest in the world. This provides us with more data and better insights than anyone else, an asset particularly valuable for training new AI capabilities. 

So with that success under its belt, it’s on to the next phase, an overarching strategy known as McDonald's > NEXT, aimed at powering growth and productivity rather than fixing what’s broken. The two are flipsides of the same coin, argues Kempczinski, taking in more than technology alone, and with a basic premise at its heart:

We will elevate the taste, quality and Customer Experience to earn more first choice visits. More first choice visits create guest count growth. Higher guest counts and greater productivity together improves restaurant economics. Stronger economics create the capacity to reinvest and reinvestment makes the NEXT turn of McDonald's growth and productivity engine stronger.

There are four pillars to > NEXT, namely:

• Menu > NEXT which “elevates taste and quality through gold standard execution and innovation to drive stronger preference, more first-choice occasions, and baseline guest-count growth`’. 

• Consumer > NEXT which capitalizes on McDonald’s brand fandom and further personalizes customer relationships to generate more visits over time.

• Restaurant > NEXT which aims to catalyze growth and fuels productivity through elevated execution, simplifying operations, modernizing restaurant design, and tapping into advanced tech.

• People > NEXT  which “equips employees to deliver a new level of hospitality that creates a better, more consistent experience for customers – increasing repeat visits”.

AI runs across the whole program, confirms Kempczinski:

Across all 4 pillars, AI serves as an accelerator, helps us understand customer behavior, innovate faster, simplify operations and make better decisions at scale. Bringing McDonald's > NEXT to life across our system requires a shared commitment to Customer Experience. We call it Make It Golden. It's our multiyear system-wide commitment to elevate the Customer Experience.

To that end, McDonald’s is rolling out ArchIQ, an AI-powered restaurant operating system that comes complete with a virtual assistant called Archy. Global CIO Brian Rice takes up the story:

Technology is central to helping our restaurant teams deliver the experiences that make McDonald's the first choice for millions of customers. When our crew has fewer complex decisions to make, when our managers have real-time visibility and when repetitive tasks are automated, we elevate both the crew and the customer experience. Put yourself in the shoes of a restaurant manager today. They're balancing food quality, staffing, equipment maintenance, inventory and customer demand across more ordering channels than ever. That's a lot.

Over recent years, a lot of work has gone into building the chain’s digital foundation to make running restaurants easier, he adds:

First, since announcing our partnership with Google, we've deployed Google Edge technology to thousands of restaurants across seven major markets, and we have plans to complete the rollout in the US in 2027. This brings high-performance AI compute power directly into our restaurants. At the same time, we've unified our point-of-sale systems across nearly all of our markets.

Here, the firm’s data insights cited by Kempczinski, come into play, he says:

As we know, AI is only as good as the data feeding it. We've built a standard restaurant Data Lake that is connected directly to restaurant-level operations. This allows our AI models to make accurate split-second decisions. By inter-connecting the operational heartbeat of over 46,000 restaurants worldwide, our Data Lake captures billions of data points daily.This creates an insurmountable advantage and a continuous learning loop that competitors can't replicate.

The standard data foundation is also what enables ArchIQ, he adds, bringing automation, diagnostics, predictive alerts and coaching into a single platform used by McDonald’s crew, restaurant managers, franchisees and its operations team.

Archy is a game changer, argues Rice, operating across a number of vectors:

First, voice AI and the drive-thru, which we call Arches. Arches takes live orders in both English and Spanish with accuracy above 90%. This frees our crew to focus on hospitality and driving growth. In our early test restaurants with Arches, drive-thru customer satisfaction is above national trends. And as Arches scales, it will free at least 50 labor hours per week. This is one of the most significant and tangible benefits of Archy AI.

Next up is automated inventory:

We’re eliminating one of the most tedious and time-consuming tasks in the restaurant. We can now track stock in real time through Bluetooth low energy tags, saving about five labor hours per week and reducing food waste by 15%. We believe this is an industry first.

Using connected equipment and computer vision, McDonald’s reckons ArchIQ improves food quality and consistency while also shifting equipment management to predictive operations. Rice notes:

This drives about a 50% improvement in key equipment and menu availability in each restaurant. That's unprecedented.

Finally, the firm’s intelligent accuracy scales verify millions of orders every single day, he concludes:

These enable our crew to catch and correct 10% of those orders before they ever reach the customer.

McDonald’s has long been a tech innovator in its sector and its AI interests date back well-beyond the current post-gen AI hype cycle. And it’s putting its money where its mouth is, as Kempczinski reveals:

We haven't broken it out, but the scale of what we've had to invest from a technology standpoint to get to a common global tech platform to get those data puddles into data lakes, that has been a massive amount of spend. 

Worth the super-sized price, though? Time will tell as Archy is now on the menu. Let’s check back in in a few months.