For the second time this year, McDonald's has agreed to acquire a young company building tech that could help prepare the Golden Arches for the future. And it sounds like it might be just the beginning of the fast-food giant's ambitions in the world of startups.
McDonald's announced plans Tuesday to purchase Apprente, a developer of voice-based conversational software that could soon be used to automatically listen to and process orders for Happy Meals and Big Macs at a location near you. McDonald's also revealed that Apprente's staff will become the founding members of a new team within the company called McD Tech Labs, which will spearhead an initiative to make the burger business a bigger presence in Silicon Valley. Expect more tech-focused hires to come.
With its headquarters in Mountain View, Apprente would seem well-placed to coordinate those efforts. The company was founded in 2017, and it revealed its only round of private funding in 2018, a $4.75 million seed round that included backing from AME Cloud Ventures, Greylock Partners and StageOne Ventures.
McDonald's announced the takeover of another startup back in March, reportedly agreeing to pay more than $300 million for Dynamic Yield, which creates digital menu displays that can be updated and personalized in real time to account for any number of factors, ranging from what else a customer is ordering to the weather forecast. McDonald's says it's already installed the company's tech in more than 8,000 locations, with hopes to spread that footprint to every drive-through in the US by the end of the year.
The move came less than nine months after Dynamic Yield raised $32 million in Series D funding from Viola Growth and Union Tech Ventures, taking its total backing to $77 million. Based in both New York and Tel Aviv, the company counted Ikea and HelloFresh among its clientele before striking a sale agreement with McDonald's.
The two acquisitions are rarities for McDonald's—in fact, they represent the company's first takeovers in nearly two decades, according to PitchBook data (not counting a deal conducted by its McDonald's India affiliate). And in the past, the company's acquisitive activity was focused on other eateries, rather than startups developing products that could help McDonald's streamline its existing operations.
In 1998, McDonald's acquired a minority holding in a little-known Mexican food chain called Chipotle. The next year, it upped its interest to a majority stake. McDonald's remained Chipotle's controlling shareholder up until a 2006 IPO, pumping a total of $340 million into the company to help grow its footprint from 13 stores to nearly 500, according to a Bloomberg oral history of the fast-casual chain.
McDonald's other major former foray into M&A came around the same time, in 2000, when it reportedly paid $173.5 million for Boston Market, another operator of fast-casual restaurants in the US. McDonald's retained that stake until 2007, when it exited the business to Sun Capital Partners, a buyout firm based in Florida.
After all that time sitting out the M&A game, though, McDonald's is diving back in, part of an ongoing effort to modernize its operations. Its delivery partnership with Uber Eats is another branch of the strategy, as is the ongoing installation of self-ordering kiosks, which the company hopes to have in all US locations by 2020.
Pair those projects with the tech being acquired from Dynamic Yield and Apprente, and a clear trend emerges: McDonald's wants to make it as easy and stress-free as possible for its customers to buy a whole lot of burgers and fries.
Featured image courtesy of McDonald's
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