McDonald’s Digital Transformation: Are we Lovin’ It?Digital Transformation | 0 comments | by Erin Quilliam
Many companies have undergone a digital transformation in recent years, including many Fortune 500 companies. Adopting a digitally-focused approach to business not only has a host of benefits for your company but it helps to create relevance and longevity in a digital future.
In this article, we will provide a brief recap of what digital transformation is and its importance. We will then investigate a successful example of digital transformation at work. This is by examining McDonald’s vast transformation. You will learn about what it is they have changed, and what they have achieved as a direct result. You can also view our new infographic showing the facts and successes of McDonald’s transformation.
What is Digital Transformation?
It is the implementation and integration of digital technology and strategies in all areas of a business. The transformation goes far beyond making us of a few items of the latest tech. It also involves hiring and training the right talent and skillsets, and changing your work structure and process in order to adopt digital services and learning at every level of business.
You can read a definition and introduction to digital transformation here.
Why Undertake a Digital Transformation?
Digital transformation is now largely seen as a necessity. The most likely reason a business undertakes a digital transformation is in order to survive. Survival is far from the only reason, however. Digital transformation brings many benefits to a business who undertakes it.
The Advantages of Digital Transformation
- Survive and thrive in an increasingly competitive, technology and data-driven world.
- Reduce business costs by automating business processes, or becoming more efficient with the help of modern technology.
- Become a more agile and resilient business by phasing out outdated legacy systems, enabling you to be more nimble and adaptive.
- Providing better customer experience is the main aim of many digital transformations. It is achieved in various ways thanks to transforming and employing modern tech.
- Consolidate customer experience by integrating and unifying systems to create a universal experience, however customers choose to interact with you.
- Improved analytics thanks to the integrated systems.
- Meet and exceed customer expectations for personalised content and connectivity.
- Drive revenue through increased and improved customer interactions.
Food for Thought: The Urgency to Transform
31% of companies have invested in artificial intelligence in order to gain a competitive advantage. That’s almost a third investing in just that one field of digital technology.
This begs the question: if you aren’t pursuing anything to advance and digitise an aspect of your business process, are you at risk of being left behind? If you’re not investing anything in digital, then yes, you’re at severe risk of dropping back.
Additionally, almost half of business owners believe their current business models will cease to exist in five years due to digital disruption. Therefore, adopting a digital focus is a case of adapting to survive for many businesses.
A Successful Example of Digital Transformation
McDonald’s Huge Transformation
There’s little doubt we have all seen and used one of McDonald’s self-service kiosks. They were first introduced to stores in 2015, but already feel like they have been around for far longer. These kiosks are probably the most prominent feature of McDonald’s huge digital transformation.
Four years on, and the transformation has hit most stores. Not only introducing self-service kiosks, but table service, delivery, mobile charging points, table-mounted tablets, interactive “magic tables”, delivery, and more.
It isn’t just about adding new technology, however. The transformation also includes refurbishing dining areas and introducing two-lane drive thru’s. In addition, the way restaurant kitchens are structured and their workflows have been changed. This is both in order to work more efficiently with their new systems, and to improve speed in a bid to meet customer expectations of convenience.
The transformation has been unprecedented in the speed and scale of delivery. Shown not only by the number of revamped stores but the growth of their digital innovation team. The team grew from 3 to 130 people in only 18 months.
The number of digitally transformed “Experience the Future” stores:
- 4500 US branches
- Over 1000 US branches were transformed in 2018
- 75% of their Chinese outlets are “Experience the Future”
- 80% complete “Experience the Future” transformation in the UK
The ROI of Digital Transformation
Based on the number of transformed stores, and the rapid pace at which the transformation is taking place, it is evident that the fast-food chain must be seeing a significant returns from employing digital solutions and strategies.
In Q1 of 2018 alone, McDonald’s saw a 9% increase in revenue and a 13% increase in net income.
Meanwhile in the first quarter of this year, they saw a further 5.4% increase in global sales.
This growth is now global and showing no signs of slowing, as they have announced further expansion across the world. These include plans to open 2000 new stores in China by 2022 and 300 new UK sites within 10 years.
This significant growth is directly credited to the transformation.
There are impressive statistics for McDonald’s consecutive quarterly sales growth. Including:
- The UK: 49 consecutive quarters of sales growth.
- The UK: Continuing guest count increases.
- Germany: 7 consecutive quarters of sales growth.
- Germany: The best annual sale growth percentage in 25 years.
- Worldwide: 15th consecutive quarter of comparable sales growth.
President and CEO Steve Easterbrook credited this huge growth to “modernised restaurants and the benefits of one of the most effective digital engagement programs”.
Which means that McDonald’s growth and increased revenue was achieved directly from their digital transformation.
Why Were These Changes Made?
The project and the changes it makes are all fed by customer and employee insight.
The motivation for the transformation has largely come from technological developments in the industry, customer expectations, and changing consumer spending habits.
Although the project has cost millions, the growth achieved and customer response has led Vice-President Jason Clark to surmise these changes have “gone down incredibly well.”
Even a Single Step of Their Transformation has seen Huge Success
One aspect of the transformation included the long-awaited introduction of delivery. McDonald’s partnered with other companies such as UberEats in order to do this, rather than develop their own delivery service.
Regardless of how it has been carried out, the introduction of the service has brought with it massive increases in engagement and sales.
- 60 million app downloads in China.
- Over 1 million unique users in the UK.
- 10% of sales are now through delivery in the UK, France, and Australia.
- High double-digit sales growth in the US, UK and France due to delivery.
- Even larger sales growth in Canada, Italy and Russia.
If this single aspect of their transformation has had such success, the scale of their growth thanks to the entire process must be hugely impressive.
When it Comes to Digital Transformation, Are We “Lovin’ It”?
In short, yes. We really are.
McDonald’s has seen significant and consistent growth in revenue and in guest count. Meaning the transformation has not only reached new customers, but it has fostered great engagement with all patrons. Not to mention, it has influenced us to more readily splash the cash on a few happy meals.
Despite the company investing millions in their digital transformation, the cost has clearly been worth it. Despite the cost, they continue to roll out the transformation programme in further stores and countries. Furthermore, they continue to expand in an economic climate that has seen many other burger chains suffer.
The changes have been received incredibly well and are certainly fulfilling the aim of improving customer experience. Therefore, McDonald’s serves the perfect example of what digital transformation is; matching the business process and delivery with customers’ expectations. It’s also an extremely successful example of digital transformation. Both in terms of how thorough the transformation is within the business, but also the positive impact it has had on the company.
The effect of the transformation has even influenced the unchanged aspects of McDonald’s. Paul Pomrey, UK Chief Executive has said, “The customer’s perception of the quality of the food has changed… A Big Mac tastes better in a reimaged restaurant, it just does.” So even the core, elements of what the business delivers have been seen to improve, without any change to them. Not to mention, the evident improvement in the public’s perception of the business and it’s offering thanks to the transformation.
McDonald’s example of digital transformation is one of the most expansive on the planet. Wherever you are in the world, you have more than likely seen and interacted with the business, and at least one element of their transformation.
It’s safe to say that digital transformation has increased public perception and engagement with the chain. It has provided the means to their consistent growth despite existing in a world where many other fast-food and casual dining chains are struggling. Making it not only one of the most influential digital transformations, but one of the most successful too.
Fast food is certainly not the only industry taking advantage of digital. And McDonald’s is not the only company leveraging transformation to create a more successful business.
Any business can adopt a digitally-focused approach, and ensure they meet the evolving expectations of customers.
Do you want to discover exactly how your own business could foster a digital transformation?
Tags: digital first, digital future, digital ready, digital strategy, digital transformation, digital trends, digitised