
McDonald's Acquires Machine-Learning Startup Dynamic Yield for $300M - howard941
https://www.wired.com/story/mcdonalds-big-data-dynamic-yield-acquisition/
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crazygringo
Two things most surprising about this:

\- Presumably you can get 90% of the value for 5% of the price. McDonald's
isn't Amazon. They have 100 (?) menu items, not 1,000,000 products. Why are
they spending $300M instead of hiring a few data scientists? Or just be a
customer of the company?

\- Dynamic Yield has many other clients, and it sounds like they'll continue
to serve those. Is McDonald's the right owner for a high-tech customer
intelligence product? It just feels like such a bizarre cultural and core-
competency fit. Maybe invest partly in it, but buy it outright? I don't get
it. Seems like you'd rather share the board with other experts?

~~~
pionar
I don't know about McD's, but I work at another very large franchised quick-
service restaurant (QSR) (not McD's, but in a different category).

For companies like these, that operate in 10's of thousands of franchisee-
owned locations, the number of products and the combination of configurations
is not merely a function of the things you see on the menu. It's all of those
products, with their different combination of parts (beef patties, lettuce,
etc.), and then franchisee and regional variations (In some countries, you
can't tell a franchisee what they can or can't sell, etc.)

Add on top of that customer modifications to the product in their order (extra
pickles, no onions, etc.)

Why does this matter? It drives lots of stuff - food costs, inventory,
inventory & sales forecasting (how many pickles do I need this week?) new item
research, profit margins, etc.

So you take this, multiply it by 10,000, 15,000, or, in McD's case, 36,000
stores across 100+ countries (half both those numbers in my company's case)
and you're talking about vast amounts of information across millions of
transactions every day, and that is in fact Big Data.

Whether this is a smart move, I'm not sure. I'm of the opinion that if a piece
of technology is core to the _operation_ of your business (for a QSR, things
like POS systems, backend administrative systems, etc.), it should be in your
house. Other things (HR systems, big data systems) should not be. But maybe
McD's sees it differently.

~~~
teddyuk
>> "and that is in fact Big Data."

don't you mean "and that is in fact Big Mac Data."

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nostromo
It seems like when your company's revenue has been flat for over a decade, you
should focus on improving your core offering of, you know, _food quality_ ,
and not find new ways to annoy customers with data mining and extreme
personalization.

In 2009 Dominos realized their food sucked, committed to improving it, and
have since been doing very well. (Their stock has more than quadrupled.) At
some point McDonalds will need to do the same.

~~~
crazygringo
What are you talking about? McDonald's has been.

They revamped their quarter pounders a ~year ago to be much fresher, tastier,
juicier burgers. They serve more gourmet-style toppings now and a variety of
cheeses. They're experimenting with new items like the morning "donut sticks"
which are surprisingly good. The buttermilk chicken tenders are worlds beyond
the old nuggets. And you can get breakfast all day, with eggs that are now
fresh-cracked.

They still sell all their old stuff because people still love it. But if you
think their menu hasn't been increasing in quality for those who want it, you
haven't been paying attention. Some people prefer not to believe it.

But it's still McDonald's. People want and like McDonald's. They're not
looking for fine dining.

~~~
nubbins
McDonalds as a company has fine food quality based on the fresh hot and
delicious McDonalds I got in Japan. I believe McDonalds US has a store
management and personnel problem, i.e. that no one gives a shit. Even after
the “fresher” Quarter Pounders the meat was warmer but I sometimes got buns so
dry and stale they were falling apart in the box. Sure theres lots of timers
and tech to make sure workers can’t burn the fries but it appears to me no one
in charge of overall quality or consistency.

~~~
siedes
That's what happens when you have a culture that so heavily looks down on
people who work these kinds of jobs. Failures who couldn't make it in school
work at Mcdonalds they say, and failures they'll get, making their burgers.

~~~
sombremesa
Yeah, the attitude of Japan towards these workers is vastly different.

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ineedasername
Dynamic Yield (reasonably) seems to focus initial efforts on associating a
unique id with customers. Given that, it's not much of a leap at all to think
that McDonald's will start capturing license plates in the drive through and
associating them with the correct order. (Heck, they might do it already) With
Dyanamic Yield they then offer custom recommendations the next time that plate
number is detected.

I'm not sure if that creeps me out, or if the data geek in me likes the
elegant solution to a problem. Why choose? It can be both.

~~~
chrischen
Well, at mom and pop shops it already happens via the human worker recognizing
and tracking you, without consent.

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barbecue_sauce
Still creeps me out.

~~~
ovi256
Just say loudly as you enter the establishment: "I do not consent to being
tracked, except as necessary to fulfill the service under GDPR"

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ineedasername
Interesting that they decided to acquire the company rather than just become a
customer. Perhaps they saw strategic value of depriving other potential
customers? In any case, the article was light on specific insights McDonalds
has received and instead gave hypotheticals, so I thought I'd share this from
Dynamic Yield-- it's a case study with more specifics so it gave me a much
better idea of what they do:

[https://www.dynamicyield.com/case-
studies/hellofresh/](https://www.dynamicyield.com/case-studies/hellofresh/)

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ams6110
I think customers will find this very annoying. There's already way too many
options on the menu. And their in store self service ordering kiosks are
horrendously complicated already.

They should eliminate about 60% of the menu and focus on speed and quality for
the remainder.

~~~
joezydeco
_focus on speed and quality_

That's the idea. Part of what they're trying to do is speed up drive-thru
service, since that's now where the majority of customers visit.

Humans can't predict what to make in the minutes before a customer pulls up to
the speaker, but an ML tied into a number of systems and inputs might be able
to do a better job.

It's not really anything new, to be honest. Back in the days where restaurants
cooked and wrapped the burgers ahead of time and held them in a warming bin
for 10 minutes at a time (at least that's what the spec dictated) the managers
would keep detailed records on customer count, weather, cars in the lot, local
events, etc and try to make predictions based on historical data. Wasn't the
most effective, but it helped. This is just a modernization of that idea.

~~~
toast0
Man was it fast when you could come in and they had burgers in the bin
waiting. They got shamed into cooking to order, and the downside is waiting;
I'm never ordering a quarter pounder again since they changed those recently
to take forever to cook.

~~~
joezydeco
From what I know, speeding up the whole "made to order" menu is one of the
prime motivators of all this technology. The fresh burgers are a leap ahead in
quality but an order of magnitude slower to make.

MCD will most likely spend half a billion dollars to get that burger on the
grill 90 seconds earlier if it's possible.

~~~
ams6110
No the burgers are not a leap ahead. They are marginally better, but that
isn't saying much. I find them barely edible but tolerate them if I'm pressed
for time.

~~~
joezydeco
Your opinion vs millions of data points on their end. You do you.

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YeahSureWhyNot
"If someone orders two Happy Meals at 5 o’clock, for instance, that’s probably
a parent ordering for their kids; highlight a coffee or snack for them, and
they might decide to treat themselves to a pick-me-up. And as with any
machine-learning system, the real benefits will likely come from the
unexpected." It looks like 'machine learning', 'data mining', etc. gets thrown
around a lot even when irrelevant. That machine was never going to find out
that it was a parent in there ordering 2 happy meals for their kids. Its more
like 'if 2 an item tagged for_kids sold then suggest item tagged for_adults,
if weather_temp > 40 degreea then suggest ice coffee otherwise hot coffee'
where is machine learning in that? I honestly would prefer they showed me my
recent orders based on my cars license plate just like dominos.com does when I
go back on their website

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perfmode
Machine learning isn’t magic. It’s just math.

Feature: for_kids, for_adults

Machine learning allows you to generalize inference across a large number of
features.

Instead of hardcodong control flow, you train to maximize an objective
function.

The belief is that once trained, you can infer cheaply and scalably.

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theNJR
This acquisition is a prime example of what the future of food is going to
look like. It’s interesting how food has been one of the last major consumer
categories to be eaten by software. But it’s finally happening!

Three simultaneous changes are happening related to the availability,
personalization, and niche focus of food. I’ve done a deep dive on this (1) if
you want to read more.

(1)
[https://news.ycombinator.com/item?id=19521655](https://news.ycombinator.com/item?id=19521655)

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mn3m
The beginning of the robotic takeover according to Manna :)
[https://marshallbrain.com/manna1.htm](https://marshallbrain.com/manna1.htm)

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gowld
Do you think "Australia" is real, or a cover name for a prison or worse?

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godzillabrennus
Travis from UBER is starting a kitchen sharing company.

McDonalds has been in the real estate game within hospitality larger and
longer than anyone.

This move makes a lot of sense and hopefully they move smartly to compete as
the industry evolves.

McDonald’s can’t scale ethically raised food to their restaurants at the price
points that matter to their customers but they can bring operational and
supply chain expertise to startup restaurants.

Maybe this is part of a bigger transition.

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jason_slack
I do worry about the loss of jobs at this level though.

Is it right to think that $300M investment + time to turn it into usable
product for the restaurants == Loss of many minimum wage (or slightly more)
jobs to make back that $300M

My local Wal*Mart now has 25 self checkouts and only 2 people manned
registers.

~~~
lexapro
Why, that would be great news! Or do you think anyone enjoys doing this type
of work?

Now it's time for the governments of the world to catch up and introduce a
basic income.

~~~
jason_slack
It might be great news on some level, but that many jobs still effects the GDP
and more importantly people's lives until they find other work, if they can,
and it may bot be easy for them. Enjoy it or not. Putting food on the table
and the next day not being able to is hard on anyone. Multiply this my
potentially millions of jobs.

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agumonkey
You need at least machine learning to fix the touchscreen centered restaurants
absurdity

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JohnFen
That's scary stuff. If I ate at McDonald's, that would be enough to make me
stop.

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nullandvoid
An AI driven menu scares you more than the contents of the food does?

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JohnFen
I don't like the food, and I don't like the surveillance and manipulation
about equally as much.

